Environmental Protection and the Generalized System of Preferences: a Legal and Appropriate Linkage?

This article will question the legality of measures of environmental ‘conditionality’ in the Generalized System of Preferences [GSP] of the European Community [EC]. The GSP is a GATT/WTO authorized scheme which permits developed nations to grant non-reciprocal tariff preferences in favour of developing countries. The objectives of the GSP are primarily development-oriented in that it aims to increase the export earnings of developing countries, promote their industrialization and accelerate rates of economic growth. A recent case taken in the WTO examined the legal contours of the grant of tariff preferences and it is in the light of this that this article will examine the so-called ‘special incentive arrangements’ of the reformed EC GSP which offers additional tariff preferences to developing countries on the ‘condition’ that they adhere to specified standards of environmental protection. * The author would like to thank Joe McMahon for useful feedback he provided on an original draft of this article. Any errors are the author’s own. 1 The legal base for the GSP is Art 133 EC. Since action is taken under the EC pillar, the term European Community/Communities shall be used. In addition, Art XI of the WTO Agreement (n6) on ‘original membership’ refers specifically to the ‘European Communities’ and not the European Union. The terms European Community and European Communities shall thus be used interchangeably throughout the body of this article. 2 The conceptual underpinnings of the GSP, however, can be traced to the United Nations Conference on Trade and Development (UNCTAD) and more particularly, its first Secretary General, Dr Raul Prebisch. See R Prebisch, ‘Towards a New Trade Policy for Development: Report by the Secretary-General of the United Nations Conference on Trade and Development’ (United Nations, New York, 1964). Dr Prebisch argued that it was essential for developing countries to diversify their economic base and emphasized the importance of export oriented growth through industrialization. In relation, Prebisch contended that preferential treatment for the industrial exports of developing countries could assist their domestic industries to overcome initial problems such as high start up costs. Preferences would guarantee a wider product market for the goods of developing countries and economies of scale would be realized which would in turn enable the lowering of costs. 3 For a relatively up-to-date overview of the GSP system please see Santos et al, ‘Generalized System of Preferences in General Agreement on Tariffs and Trade/World Trade Organisation: History and Current Issues’ (2005) 39 Journal of World Trade 637. 4 Resolution 21 (II), in, Final Act and Report of UNCTAD II, Annex 1 (United Nations, New York, 1968). [ICLQ vol 57, January 2008 pp 113–147] doi:10.1017/S0020589308000055