Monday, January 28, 2008

Discerning the Forest From the Trees: How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability

By Lawrence A. Kogan

Global Trade and Customs Journal

VOL 2; NUMBER 9, pages 319-337 (2007)


[This international law journal article has been catalogued by the British Public Library and may be accessed in hardcopy. See: ].

[Article title :Discerning the Forest From the Trees How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability

Author: Kogan, L. A.


Bibliographic details: 2007, VOL 2; NUMBER 9, pages 319-337


Country of publication: Netherlands

ISBN: ISSN 1569-755X

Unique item number: RN215946290

Shelfmark: 4195.476860

Language: English

Pricing: To buy the full text of this article you pay:£12.50 copyright fee +
service charge (from £7.85) + VAT, if applicable ]




A. The Purpose of This Article

The purpose of this article is to explore whether national and/or regional governments can be held responsible under the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO)1 law if it can be proven that their official policies and activities directly or indirectly permit, support or otherwise influence the adoption, promulgation and/or maintenance of ostensibly private and voluntary standards that result in discriminatory trade
practices or in the creation of unnecessary obstacles to international trade.

It is generally agreed that official government regulatory policymaking and private standard setting activities currently taking place within many WTO member countries are not sufficiently transparent and inclusive of foreign stakeholder input. It is also generally agreed that regulations and standards (whether technical, social or environmental) can materially impact international (cross-border) trade flows when not drafted and implemented in a benchmarked and balanced manner.2

Some governments, more than others, recognize that standards can improve their countries’ industrial and technological global competitiveness and have increasingly synchronized their use with official regulations. 3 As a result, such countries may have more than acquiesced in the development of ‘private’ environmental and corporate social responsibility (CSR) certification and labelling standards regimes that have had the effect of denying market access to a host of foreign products and services. In particular, companies operating within natural resource-based
developing countries have incurred significant and unnecessary costs and administrative burdens to satisfy such developed country environmental certification and eco-labelling standards. According to a recent study, ‘making certification a condition for trade in international
markets could reduce exports of wood products from these countries – with considerable negative impacts on forest-dependent populations’.4

This article focuses strictly on the relationship between private European-centric sustainable forest management (SFM) schemes that have arisen during the past twenty years and the official policy goals articulated by the European Community (EC), and later by the European Union (Eu)5 within its Fifth and Sixth Environmental Action Programmes (EAPs). The analysis and findings which follow, however, are equally relevant to ascertaining whether a nexus exists between official EU government sustainable development and corporate governance policies and
currently evolving private EU-centric (CSR) standards. The establishment of such a link is required before culpability can be ascribed for alleged violations of WTO law. This article does not address the merits of any claim of trade discrimination or disguised trade protectionism (i.e., the purported effects on international trade flows in forest/wood products) that could conceivably be brought against the EC and its Member States by an aggrieved GATT/WTO member as a consequence of such standards.6


During the past twenty years, European governments created a national, regional and global policy framework that facilitated and promoted the development, adoption and implementation of private Euro-centric SFMcertification and eco-labelling standards. SFM standards-related activities were undertaken within the borders of specific EUMember States and the European region by recognized private standardization bodies, namely the FSC and the PEFC. These activities were, at the very least, indirectly funded by European governments. They also clearly
reflected a key regional EU policy priority: the global promotion of SFM as part of environment-focused negative SD.

The GATT case law and the TBT Agreement provide that when governments, which are charged with the responsibility of preventing private standards setting activities undertaken within their jurisdictions from creating unnecessary obstacles to international trade, become sufficiently involved in those activities, they may be attributed to them as a matter of law. Consequently, if it can be proven that such activities gave rise to discrimination against ‘like’ foreign products or constituted disguised trade protectionism, governments may be held accountable in a WTO dispute settlement proceeding initiated by aggrieved WTO members.

The evidence in this case reveals that the EU Brussels institutions and Member State governments have been sufficiently involved in the ostensibly private SFM standards setting and implementation activities of the FSC and the PEFC to have those activities and their market effects on developing country forest/wood products attributed to them. As a result, the SFM standards activities of such groups can fairly be characterized as part of an overall EU governmental regime, and thus, as an extension of EU ‘governmental conduct’. Therefore, to the extent aggrieved WTO developing country members can prove that the FSC or PEFC standards resulted in actual trade discrimination or that they were intended to create or had the effect of creating unnecessary obstacles to trade, they may hold the EU and its participating Member States culpable under GATT/WTO law.170

Related Endnotes:

1 General Agreement on Tariffs and Trade, 33 I.L.M. 1125 (1994) (GATT); World Trade Organization (WTO).
2 Lawrence A. Kogan, National Foreign Trade Council, Looking Behind the Curtain: The Growth of Trade Barriers That Ignore Sound Science (May
2003) available at .
3 Erkki Liikanen, European Enterprise Commissioner, Commission Marks World Standards Day With Focus on Environment and Standards, in IP/01/1408 (12 October 2001) available at¼gt&doc¼IP/01/1408%7C0%7CRAPID&lg¼EN .
4 Carolyn Fischer, Francisco Aguilar, Puja Jawahar and Roger Sedjo, Resources for the Future – Forest Certification: Toward Common Standards?, World Bank Foreign Investment Advisory Group Discussion Paper 05-10 (Washington, DC: World Bank, April 2005), available at .
5 The European Community (EC) was previously known as the European Economic Community (EEC),whichwas formed pursuant to the Treaty of Rome, on 25March 1957. It consisted of six ‘commonmarket’ countries: Belgium, France, Italy, Luxembourg, the Netherlands and former West Germany. The EEC was renamed the EC on the signing of the Maastricht Treaty, on 7 February 1992, which led to the formation of the unique political union now recognized as the European Union (EU). The EC remains one of three pillars of the EU–i.e., the Community pillar, which concerns economic, social and environmental policies. See e.g., ’European Community’, Wikipedia at: ; ‘The Three Pillars of the European Union’ Wikipedia at: , last visited on 15 July 2007.
170 See Brien, as note 8 above. -- Laurel A. Brien, Understanding the International Agreement on Technical Barriers to Trade and Related Provisions of the US Trade Agreements Act of 1979 (Washington, DC: US Department of Commerce, International Trade Administration, Office of Trade Policy, September 1984) (explaining the barriers to trade requirements).

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