Working Paper No. 06-48:
Evaluating the WTO's Two Step Test for Environmental Measures Under Article XX
Date Posted: 2006
There has been considerable dissatisfaction expressed by both free trade proponents and environment activists with respect to the WTO's exercise of authority on the impact of environmental measures on international trade. The Article first sets out a analytical framework, based on public choice theory, which examines the incentives to implement measures to achieve environmental goals which function effectively as disguised barriers to trade. This is followed by a careful examination of the WTO's jurisprudence in the area, which suggests that the WTO's focus on the measure being implemented is correct. Furthermore, the two step test under Article XX, as conceived and applied by the various WTO panels, seems to be reasonably effective in weeding out measures that are functionally barriers to international trade.