Designing the Green Economy: Support & Constraints under International Trade and Investment Law

Environmental requirements, e.g. Product/production specifications, voluntary/mandatory, characteristics/ performance, labelling TBT Agreement Price & market mechanisms, e.g. environmental taxes, ETS GATT SCM Agreement Support programs, e.g. R&D, fiscal, price and investment measures Key WTO Agreement Key policy instrument Improve resource use & reduce pollutants, e.g. for energy efficiency, forestry management Internalize env’tal costs, e.g. for GHG emissions Promote development & deployment of green technologies Key objective Green procurement, e.g. adoption of technical specifications & evaluation criteria that promote procurement of green goods & services Promote sustainable consumption and production GPA

WTO Consultations According to Agreement at Issue

WTO Respondents

Trends in the Use of the WTO Dispute Settlement Mechanism

Government Procurement Agreement Article XVI: Offsets 1. Entities shall not, in the qualification and selection of suppliers, products or services, or in the evaluation of tenders and award of contracts, impose, seek or consider offsets.(7)7 (7)Offsets in government procurement are measures used to encourage local development or improve the balance-of- payments accounts by means of domestic content, licensing of technology, investment requirements, counter-trade or similar requirements. 2. Nevertheless, having regard to general policy considerations, including those relating to development, a developing country may at the time of accession negotiate conditions for the use of offsets, such as requirements for the incorporation of domestic content. Such requirements shall be used only for qualification to participate in the procurement process and not as criteria for awarding contracts. Conditions shall be objective, clearly defined and non-discriminatory …

When is a ‘subsidy’ trouble at the WTO? SUBSIDY = financial contribution + benefit SPECIFIC Material Injury CVD Serious Prejudice ACTIONABLE PROHIBITED - export contingent - domestic input req. - No environmental exceptions (?) - Agriculture specific rules

Subsidies Agreement Article 2 Specificity 2.1 … (b)Where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions[1] governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to. The criteria or conditions must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification. [1] Objective criteria or conditions, as used herein, mean criteria or conditions which are neutral, which do not favour certain enterprises over others, and which are economic in nature and horizontal in application, such as number of employees or size of enterprise.[1]

NAFTA Article 1106: Performance Requirements 1. No Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party or of a non-Party in its territory: (a) to export a given level or percentage of goods or services; (b) to achieve a given level or percentage of domestic content; … (f) to transfer technology, a production process or other proprietary knowledge to a person in its territory, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this Agreement; or … … 4. Nothing in paragraph 3 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Party or of a non-Party, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory. …