WRITTEN QUESTION E-1838/96 by James Provan (PPE) to the Commission (5 July 1996)

Subject: Convergence between WTO and EU trade law

In the light of the WTO's ruling in the case between the US and Venezuela concerning US Standards for Reformulated and Conventional Gasoline, and in the light of the Panel's concluding remarks that WTO Members were free to set their own environmental objectives where such measure demonstrably met the four tests established by the Panel in paragraph 6.35 of its report, is the Commission now prepared to reconsider its attitude to the imposition of unilateral trade measures for the purposes of conserving exhaustible natural resources?

Joint answer to Written Questions E-1837/96 and E-1838/96 given by Sir Leon Brittan on behalf of the Commission (5 September 1996)

The reports presented by the panel and the appeal body of the World Trade Organization (WTO) in the dispute between, on the one hand, Venezuela and Brazil and, on the other, the United States concerning the latter's standards for imported petrol would appear to confirm, and in some ways extend, the interpretation of the provisions of the General Agreement on Tariffs and Trade (GATT) in cases where trade measures are adopted to protect the environment.

Besides the fact that this is the first case to be settled in the WTO, one of the most significant aspects of these two reports lies in the interpretation of the general exceptions in Article XX of the Gatt, and in particular that relating to the conservation of natural resources.

When examining the measures provided for by the American law, the panel admitted not only Article XX(b) but Article XX(g) as grounds for standards designed to reduce air pollution in the areas specified by the US law, thereby making clean air an exhaustible natural resource within the meaning of that provision.

It is not, however, enough that a measure fall within the scope of Article XX for it to be justified under that provision; it must also satisfy the conditions laid down in the Article's introductory paragraph, to wit it must not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.

The Commission does not believe that the reports submitted in the dispute between the United States and Venezuela undermine the accepted interpretation of Gatt's provisions on unilateral measures. It does not see why these reports would cause it to alter its approach to the matter. In particular, the Commission considers it vital that unilateral trade measures aimed at protecting the environment outside a country's own jurisdiction and coercing other members to alter their policies be avoided.

With regard to the list of exhaustible natural resources within the meaning of Article XX(g), it must be conceded that paragraph 6.37 of the special panel's report includes a number of elements helping define what is meant by 'exhaustible natural resource'. These elements will enable the scope of Article XX(g) to be interpreted with greater precision in the future. The debate is, however, at so early a stage that there is not yet any clear jurisprudence in the matter; the jurisprudence is in a state of constant evolution and liable to move on with the examination of each new case.

For this reason, it is not possible to draw up a list of exhaustible natural resources in the Community which could be covered by Article XX(g); such a list would very quickly become incomplete or obsolete.