The Burden of Proof in National Treatment Disputes and the Environment

This paper examines the role of the burden of proof (BoP) in National Treatment (NT) disputes under trade agreements. In the situation under study, imports may cause environmental damage, in which case less favorable treatment of imported products may be globally desirable from an international efficiency point of view. But adjudicators do not with full certainty know the motives for policies that are allegedly pursued to protect the environment, but that also give commercial advantages to domestic products. The paper points to a tension between NT and environmental concerns, in that NT will primarily target countries exposed to environmental shocks. But contrary to what might be expected, this tension is not likely to arise when the environmental threats are very severe. The paper also shows why a shift of the BoP in environmental disputes toward complaining (exporting) countries will not necessarily reduce the environmental damage in importing countries. JEL classification: Q56, F13