UNFCCC and Trade Law

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

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Date produced: 12/03/2012

1. What are the legal limitations of COP decisions (under the UNFCCC) with regard to WTO/trade law in connection with REDD+?

2. To what extent could a decision that addresses the international drivers of deforestation, for example, request restrictions on the trade in commodities such as palm oil or soya etc, and related subsidies and incentives?

3. Would the COP be precluded from taking a decision that requested specific measures which might affect trade or would the COP have the authority to take such a decision with the subsequent measures taken by individual countries alone being subject to WTO/trade law?

Summary: COP decisions do not have to comply with the WTO, and the COP is not precluded from a decision that requests specific measures that affect trade. However, a WTO member is not excused from its WTO obligations on account of COP decisions. For that reason, governments are likely to want COP decisions to be framed in a way that does not make it difficult to comply with WTO obligations. It is not difficult as a legal matter to devise decisions that would address drivers of deforestation without requiring members to take actions inconsistent with WTO obligations; arguments to the contrary likely have policy rather than legal motivations.

Advice:

The COP is not obligated to ensure that its decisions comply with the obligations that WTO members have undertaken under the WTO agreements or other international agreements. However, a WTO member is not generally excused from its WTO obligations on grounds that the measure is said to implement an obligation of another treaty. Since most COP members are also WTO members, they will likely seek to ensure that COP decisions do not require WTO members to violate their WTO obligations, unless there is no reasonably available means to achieve a paramount environmental objective without requiring those countries who are members of the WTO to violate their WTO obligations.

As we understand the situation with regard to measures addressing the drivers of deforestation, it seems unlikely that WTO obligations will be a serious impediment to a COP decision. There is no WTO obligation that requires a member to subsidise production of anything; in fact WTO rules encourage getting rid of subsidies. There are WTO rules against some kinds of export controls, but no rules prevent measures to reduce production, even though lower production likely means reduced exports. Further, there are exceptions to WTO rules for measures to protect plant, animal and human health, and for measures related to conservation. There is also an exception that allows export controls on scarce products, provided that the controls do not restrict exports disproportionately to domestic sales. While there are conditions to the use of exceptions, it is not normally difficult to meet the conditions, at least so long as the environment is not simply being used as a pretext to gain some commercial advantage or to discriminate between WTO members or to favour domestic products over imported products.

It is possible, by the way, that Brazil’s real concern is that the COP will request importing countries to reduce their imports from countries that do not meet forest conservation objectives. Such measures, if imposed without the agreement of the country facing such trade sanctions, might well violate WTO rules. WTO rules are not clear as to when trade measures can be imposed to try to pressure another WTO member to observe better environmental practices, and decisions interpreting those rules have also not been clear as to their scope. In any event, the COP itself is not limited by WTO rules. If governments wearing their COP hats want to issue recommendations that would require them to violate their obligations when they are wearing their WTO hats, then those governments have the opportunity to amend the WTO rules to remove the conflicts, at least among those governments who are bound by both sets of rules.