Introduction

How is it possible to reconcile trade liberalization with environmental protection? This is among the most urgent questions facing the new trade round negotiation, the Doha Development Agenda, of the World Trade Organization (WTO). In particular, the issue of the permissibility of process-and-production-method-(PPM-) based trade measures under the WTO law is the most difficult and controversial one afflicting WTO lawyers. The problem can be described in a nutshell: can a trade ban on a product imposed because of the fact that the PPM of that product is harmful to the environment be consistent with WTO law?

The purpose of this chapter is to trace what the panels and the Appellate Body of the WTO have done in settlement of disputes concerning the above problem and to think about a possible evolutionary role that the Appellate Body can play in resolution of “trade and environment” disputes.

In order to do this, the chapter first considers generally the essential characteristics of the problem of so called “trade and environment” and then identifies a special problem which is raised by these characteristics in the context of the dispute settlement system of the WTO (II). Second, on a more substantial level, this chapter will consider what a trade related environmental measure (TREM) based on a PPM is and will then identify the issues of its possible inconsistency with the WTO law (III). Third, we will trace how the panels and the Appellate Body have disposed of these issues in practice and also make some analysis of a new approach adopted by the Appellate Body in interpreting the WTO law in two recent cases (IV).