| Fitting the Environmental Piece Into the Maastricht Puzzle |
| Marissa A. Perrone |
| Editors' Summary: Under the Maastricht Treaty, the nations that are members of the European Union (EU) together must develop common European environmental policies. Toward this end, the European Commission has proposed EU-wide environmental laws that are meant to harmonize the various and diverging environmental laws and policies of EU member states. The laws attempt to overcome the various trade, environmental, and sovereignty concerns of member states that are obstacles to environmental unification. To date, these laws exist in essentially two forms: Mandatory and voluntary. This Article attempts to discern the optimal form for such laws, in light of the expressed concerns of member states and the disciplines the General Agreement on Tariffs and Trade (GATT), including the GATT Agreement on Technical Barriers to Trade, imposes on such international laws. This Article discusses the mandatory EU Packaging and Packaging Waste Directive and the voluntary Eco-Management and Audit Scheme Regulation. |
| Ms. Perrone is President of Eco-Trade Consulting in Philadelphia, Pennsylvania. Ms. Perrone formerly served as Deputy Director for Trade and Environment Affairs at the Office of the U.S. Trade Representative. She holds an MBA from the University of Maryland. |
| [25 ELR 10195]
In 1957, European nations took important steps toward unification by signing the Treaty of Rome,1 which established the European Economic Community. Thirty-five years later European nations signed the Maastricht Treaty,2 launching more sophisticated efforts toward economic and monetary unification in order to build a more competitive European Union (EU).3 |
| One aspect of economic unification under the Maastricht Treaty mandates the formation of a common European environmental policy. The common environmental policy is expected to integrate the wide spectrum of EU member state4 national environmental laws and policies. The spectrum of these national policies includes some of the most stringent and innovative European environmental laws and others that set considerably lower standards.5 This wide range of national environmental policies often creates obstacles to achieving both environmental and trade objectives within the EU. |
| To overcome these obstacles, the European Commission6 has proposed several EU-wide environmental laws that harmonize diverging member state environmental laws. EU harmonizing environmental laws, however, may inadvertently create another problem; they may restrict a member state's sovereign right to set national environmental policies and laws. Indeed, the recent proposal of several such laws has intensified concern among member states that the laws will compromise their sovereignty in exchange for establishing common policies at the EU level. |
| Balancing sovereignty concerns of member states and harmonization goals of the EU is perhaps one of the most vexing challenges facing Europe as member states move closer to unification. All parties involved in unification efforts cannot ignore the issue because it is prominent in numerous components of the unification process under the Maastricht Treaty. For example, the sovereignty issue has emerged during efforts to forge common policies on agriculture, environment, finance, and transportation, among other subjects. Thus, the question surrounding EU harmonization is not whether Europe will harmonize diverging member state laws, including environmental laws, but rather how Europe will harmonize diverging member state laws. This Article attempts to discern the optimal approach or structure for harmonizing European environmental laws in light of the aforementioned obstacles and existing international law. |
| After providing some background regarding the trade, environmental, and sovereignty factors affecting environmental unification, the Article discusses two EU harmonizing laws that take very different approaches to surmounting these obstacles: One mandatory law — the EU Packaging and Packaging Waste Directive7 — and one voluntary law — the EU Eco-Management and Audit Scheme (EMAS) Regulation.8 The EU Council of Ministers has recently adopted [25 ELR 10196] both laws (1994 and 1993, respectively).9 A review of these laws reveals how they address trade, environment, and sovereignty factors in order for the EU and member states to move toward environmental integration. |
| The Article also compares the approaches of the two laws in light of provisions in the General Agreement on Tariffs and Trade of 1994 (GATT),10 including the GATT Agreement on Technical Barriers to Trade (TBT),11 the latter of which subjects mandatory and voluntary environmental laws to different disciplines. The Article concludes that optimal European harmonizing environmental laws contain a combination of mandatory aspects that set minimum environmental standards and voluntary aspects that provide incentives to achieve higher standards. |
| Background |
| Factors Affecting Environmental Unification |
| While there may be innumerable factors affecting Europe's ability to forge a common environmental policy, three factors — trade, environmental, and sovereignty concerns — are critical to the effort. This section briefly introduces each of the three factors and illustrates their potential impact on environmental unification in Europe. |
| Trade Concerns: The EU currently lacks a common environmental policy to guide national member state environmental laws. Instead, there is a wide range of environmental laws. The concern is that this range of laws may affect the free flow of trade between member states. |
| Consider a scenario in which one member state, Country A, adopts an environmental law requiring that all packaging in its country (domestic or imported), contain 70 percent recycled content. All other member states have national laws mandating a wide range of recycled content for packaging (5 to 40 percent). Country A's law is likely to spur competition throughout the EU in developing packaging technology needed to meet the 70 percent recycled content requirement. The law, however, is also likely to impact adversely trade between Country A and other member states. Industries in both Country A and in other member states will incur higher costs to establish new production processes needed to meet the requirements in Country A. These costs are likely to affect negatively the ability of companies to sell and export their products in Country A. |
| Environmental Concerns: The presence of numerous, different member state environmental laws also raises environmental concerns. In particular, without a common European environmental policy, the environmental law of one member state may negatively affect national environmental protection efforts of neighboring nations. |
| Consider a scenario in which Country B, a member state, has an environmental law requiring that 80 percent of all packaging in Country B (domestic or imported) be recycled. The other member states have a wide range of recycling requirements (5 to 40 percent). Last year, Country B collected for recycling 90 percent of its packaging. Because Country B's recycling system can recycle only 80 percent of total packaging in its country, Country B exported its surplus packaging waste to Country L, a lesser-developed member state. Although Country L may receive high disposal fees for accepting the waste, it does not have appropriate recycling technology to recycle Country B's waste. Country L ended up dumping the imported waste into its national landfill, exacerbating its landfill shortage problem. |
| Sovereignty Concerns: The trade and environmental concerns that diverging member state environmental laws engender have prompted the EU Commission to propose harmonizing member state laws. There are two basic types of EU harmonizing laws; laws with which compliance is mandatory and laws with which compliance is voluntary. Mandatory EU harmonizing laws often raise sovereignty concerns among member states, whereas voluntary EU harmonizing laws generally do not. For instance, mandatory EU harmonizing laws setting minimum and/or maximum standards but restricting member states from going beyond the standards, raise concern over a member state's sovereign right to set national environmental laws. In contrast, voluntary EU harmonizing laws allow member states to follow the EU harmonizing law or to set their own national environmental law. |
| Consider a scenario in which the European Council adopts a mandatory directive requiring that a maximum of 70 percent of all cosmetics sold in any member state be manufactured without the use of animal testing. The directive is meant to harmonize a wide range of "no animal testing" laws for cosmetics that exists among member states. Years ago, Country K, a member state, adopted a national law requiring that 95 percent of all cosmetics sold in its country (domestic and imported) be manufactured without the use of animal testing. When the EU Council adopts the EU law setting a 70 percent maximum "ceiling," Country K argues that the law violates its sovereign right to apply more stringent environmental protection measures than those of an EU harmonizing law. Country K refuses to give up its national cosmetics law requiring 95 percent "no animal testing," thereby impeding environmental integration. |
| EU Harmonizing Laws |
| To overcome the obstacles to free trade and environmental protection that diverging member state environmental laws cause, the European Commission has proposed, and the European Council has adopted, several EU harmonizing laws. Two such laws are the EU Packaging and Packaging Waste Directive, and the previously mentioned EMAS Regulation. Both laws address particular areas of societal concern while attempting to unify environmental policy in the EU, yet they employ different approaches. The Packaging Directive employs a mandatory approach to reducing packaging waste and the EMAS Regulation employs a voluntary approach to increasing environmentally responsible [25 ELR 10197] corporate behavior.12 As might be expected, the mandatory nature of the Packaging Directive raises sovereignty concerns for member states while the voluntary approach of the EMAS Regulation does not. |
| The goals, structure, and requirements of each law are outlined below. The trade, environmental, and sovereignty concerns that the two laws address and raise are also discussed. |
| EU Packaging and Packaging Waste Directive |
| In response to the serious trade and environmental concerns that the patchwork of national packaging laws of European nations has engendered, the European Commission proposed the EU Packaging and Packaging Waste Directive in 199213 as a vehicle to harmonize different member state packaging laws. After several years of negotiations, a final EU Packaging and Packaging Waste Directive was adopted on December 14, 1994.14 |
| The stated goal of the Packaging Directive is to reduce and to recycle all packaging used for containment, protection, handling, delivery and presentation of goods. The law encompasses packaging "made of any materials of any nature" generated from households and industry alike.15 |
| The Directive requires that member states meet specific target goals for recovery and recycling of packaging waste. In particular, member states must, within five years of implementing the Directive: Recover 50 to 65 percent by weight of the packaging waste; recycle 25 to 45 percent by weight of all packaging materials contained in packaging waste with a minimum recycling of at least 15 percent of each packaging material.16 |
| The Directive allows member states considerable flexibility in establishing methods to achieve target goals set in the law. Member states may design and implement their own national collection and recycling systems to fulfill the Directive's recovery and recycling targets. The Directive sets few restrictions for member states regarding national systems, although the systems must be openly available and "shall also apply to imported products under non-discriminatory conditions."17 This provision ensures that member state systems are accessible to European and foreign industry alike. |
| In several ways, the Packaging Directive attempts to reduce potential trade and environmental conflicts arising from diverging member state packaging laws in order to bring Europe closer to environmental unification. One of the Directive's primary methods of reducing conflict is harmonization of the member state laws. |
| Trade Concerns: The Packaging Directive addresses the concern that different, inconsistent national packaging programs may adversely impact trade between member states. The trade issue stems from a lack of an international or EU-wide standard on packaging to guide diverging European national programs toward some level of consistency. Ten of the 15 member states currently have proposed or implemented national programs on packaging.18 The national programs are unique in structure and targets for recovery, reduction, recycling, and incineration of packaging, as well as in the mechanisms employed to achieve packaging reduction, such as labeling, taxes, take-back schemes, and deposit-refund schemes. |
| The trade concern is that industry is unable to trade freely with member states if their products are subject to a wide range of different packaging requirements, which may be costly to fulfill. For example, a consumer goods company in France planning to export to all member states may have to modify its products to meet 10 different packaging program requirements. The company may be subject to a packaging tax in Belgium, a deposit-refund scheme in Denmark, and a labeling system in Germany. If the French company is unable or unwilling to adapt its packaging to meet different country requirements, the company will be limited in its ability to export to all member states. This situation potentially raises significant trade barriers and conflicts among industries in Europe. |
| The Packaging Directive attempts to reduce potential trade conflicts in at least three ways. First, the Directive establishes mandatory "essential requirement"19 standards that packaging in all member states must meet. The essential requirement standards include standards regarding composition, e.g., packaging weight and volume, and the nature of the packaging, e.g., reusability, recoverability, and recyclability. These standards should help make member state packaging programs more unified and consistent. |
| Second, the Packaging Directive affords industry considerable time to design packaging that meets the essential requirements. Member states will have three years from the Directive's effective date to ensure that all packaging placed in their national market meets the essential requirement standards.20 This provision on timing gives industry the opportunity to come up to speed gradually in meeting the essential requirement standards, thereby leveling the playing field among companies. |
| Third, the EU Council will decide on marking and identification systems after the Directive is implemented to facilitate the collection, re-use, recovery, and recycling of [25 ELR 10198] packaging.21 These systems are likely to facilitate the free movement of packaged goods throughout the EU market. |
| Environmental Concerns: The Packaging Directive addresses concerns regarding the wide range of member state packaging programs that may adversely impact environmental protection efforts of individual nations. Similar to the trade issues, the environmental concerns arise primarily because there is no EU or international standard guiding member state packaging programs. |
| The current system of different, inconsistent national programs has sparked debate over two key environmental concerns. First, there is concern that without some guidance from the EU-level, several member states will not properly deal with their own packaging waste. For example, some member states have packaging programs that are neither comprehensive nor effective in recovering, reusing, recycling, or disposing of packaging from their country. Other member states have no formal packaging program whatsoever.22 |
| There is also concern that member states with aggressive packaging programs may adversely affect packaging reduction efforts of other member states. The German packaging law23 is perhaps the paradigm of how one country's program may impact other member states. Known as the "German Green Dot" law,24 it establishes aggressive recovery and recycling targets for numerous packaging materials. The German law requires manufacturers, distributors, and retailers to "take-back" used packaging or ensure that the packaging is collected by a certified collector. The largest certified collector of packaging in Germany is the Duales System Deutschland (DSD). In 1993, the DSD collected 4.6 million tonnes of used packaging, of which one million tonnes was plastic.25 In that year, the DSD collected more plastic packaging waste than could be recycled. Consequently, Germany exported large amounts of its plastic packaging waste to foreign countries. The export of Germany's surplus plastic waste has adversely affected the nascent recovery and recycling systems of neighboring European countries by driving down the price of plastic waste. The German packaging program, however, is not the only aggressive packaging program in Europe that is stirring debate over the environmental impact of national packaging programs on neighboring member states.26 |
| The Packaging Directive attempts to mitigate these environmental concerns by establishing minimum and maximum standards for recovery and recycling of packaging. The Directive's minimum standards are meant to increase packaging reduction efforts by member states who currently have minimal or no national packaging programs. Specifically, the Packaging Directive requires the recovery of at least 50 percent of all packaging material by weight and the recycling of at least 25 percent of all packaging materials by weight. Further, at least 15 percent of each packaging material must be recycled, including glass, plastic, paper, and aluminum. |
| In contrast, the Directive's maximum packaging standards are meant to control aggressive member state packaging programs. The Packaging Directive mandates that a maximum of 65 percent of all packaging material by weight be recovered and a maximum of 45 percent of all packaging material by weight be recycled. These maximum standards should reduce the potential that one country's packaging program will significantly effect the recovery and recycling systems of neighboring countries. |
| Sovereignty Concerns: Although the Packaging Directive's attempts to mitigate trade and environmental concerns should help to integrate EU environmental policy, the Directive has also raised another issue: member state sovereignty. The Packaging Directive addresses the sovereignty concerns in several ways, although not to the satisfaction of all member states. |
| Member state sovereignty concerns center around provisions in the Packaging Directive that set mandatory maximum "ceilings" for recovery (65 percent) and for recycling (45 percent) of packaging. Several member states have existing national packaging programs that already achieve recovery and recycling rates higher than those set in the Packaging Directive.27 These member states have argued that if forced to comply with the maximum standards in the EU Directive, they would have to weaken their national packaging programs and compromise environmental protection standards in their countries. |
| These sovereignty concerns have led Germany, Denmark, the Netherlands, Belgium, and Luxembourg to oppose the EU Packaging Directive formally. These countries argue that the Directive compromises their sovereign right under Article 100a(4) of the Treaty of Rome to apply more stringent measures for environmental protection than those of an EU harmonizing law.28 Some or all of these member [25 ELR 10199] states might challenge the Packaging Directive on these grounds before the European Court of Justice.29 |
| In opposition to these states' view, however, the Packaging Directive does contain important provisions allowing member states some flexibility in meeting the mandatory packaging standards. These provisions appear to preserve member state sovereignty rights by allowing member states to meet targets lower than the minimum standards and higher than the maximum standards. For example, the Directive specifically allows three members the option to meet lower recovery and recycling targets than those set in the Packaging Directive.30 The three member states — Greece, Ireland, and Portugal — are given such leeway because of geographical and logistical limitations affecting their ability to set up recovery and recycling systems. Similarly, the Packaging Directive allows member states to meet targets higher than those set in the EU law. Member states may establish or maintain national programs that go "beyond the targets" in the Directive only after obtaining approval from the EU Commission.31 The approval process entails an examination of the member state packaging program by the EU Commission to ensure that several criteria are met.32 |
| Despite these provisions, the mandatory nature of the Packaging Directive continues to create sovereignty concerns among member states. These unresolved sovereignty issues may negatively affect the EU's current and future environmental unification efforts. |
| EU Eco-Management and Audit Regulation |
| In March 1993, the EU Council of Ministers adopted the EMAS Regulation to promote environmentally responsible corporate behavior. Effective in April 1995,33 the regulation establishes a voluntary environmental management and auditing system for companies with industrial sites. Like the Packaging Directive, the EMAS Regulation addresses trade and environmental issues that diverging member state laws engender. The Regulation is also designed to harmonize diverging member state laws to facilitate Europe's effort to form a common environmental policy, as mandated by the Maastricht Treaty. Significantly, the two laws differ in that the voluntary EMAS Regulation does not impede member state sovereignty, while the mandatory Packaging Directive does create serious sovereignty concerns. |
| The stated objective of the EMAS Regulation is to promote the evaluation and continual "improvement of the environmental performance of industrial activities and the provision of the relevant information to the public."34 Toward that goal, the EMAS Regulation establishes a voluntary program whereby participating companies must set up environmental management systems for individual industrial sites and, subsequently, have an independent auditor evaluate the environmental performance of their sites.35 |
| Companies electing to participate in the EMAS program are subject to numerous specific requirements throughout the program. The EMAS program requires extensive analysis, documentation, and disclosure from participating companies. The requirements may be categorized into three general stages. In the first stage, companies must set measurable environmental goals for each site. To fulfill this requirement, a company shall adopt a company environmental policy; conduct environmental review of the site to assess environmental impact and performance of the site, including quantifiable objectives and deadlines; and develop an "Environmental Management System" (EMS) for each site.36 |
| In the second stage of the EMAS program, companies must evaluate the actual environmental performance of an industrial site compared to planned goals. This requirement is fulfilled through the "Environmental Audit," which is conducted by an independent, accredited auditor who is external to the company. The auditor's findings are compiled in an "Environmental Audit Report," which is prepared for internal management use but not for public dissemination.37 |
| In the third stage of the EMAS program, companies shall communicate a site's environmental performance to the public via the "Environmental Statement." The Environmental Statement must include, inter alia: A description of the company's activities at the site; an "assessment of all the significant environmental issues of relevance;" and a summary of figures on pollution, emissions, and waste generation.38 |
| Trade Concerns: The EMAS Regulation addresses concerns that the proliferation of different member state ecomanagement and audit programs may adversely affect trade within the EU. The concerns stem from the fact that before the EU adopted the EMAS Regulation, there was no EU-wide or other international standard to guide national programs.39 To date, several member states have eco-management and auditing programs with unique industry participation requirements.40 Some programs require extensive documentation and disclosure of industrial activities and [25 ELR 10200] compliance with environmental laws, while other programs are less stringent and more informal.41 |
| Problems arise in that companies doing business in more than one of these countries may be at a competitive disadvantage by not participating in all of the different national programs. For instance, if a member state's national EMS and audit program becomes widely recognized and respected by industry and consumers, both groups may preferentially choose to deal with companies who successfully participate in the national program. Foreign companies, however, may choose not to participate in all member state programs due to financial and/or logistical concerns that stretch their financial or time resources. Foreign companies are likely to incur considerable costs learning the requirements of each national program, setting up different ecomanagement and audit systems, and fulfilling recordkeeping and documentation requirements. |
| The EMAS Regulation will alleviate such burdens in one important way. The Regulation establishes uniform standards for environmental management systems and for auditing practices throughout the EU.42 Therefore, companies doing business in more than one EU country need only establish one eco-management system and audit scheme that meets the requirements of the EMAS program.43 This provision obviates the need for companies to set up individual EMS and audit programs to fulfill numerous member state requirements. |
| Environmental Concerns: Among the member states, there is a wide range of both environmental regulations governing corporate behavior and enforcement efforts ensuring compliance with environmental laws. Member states also have a wide spectrum of EMS and audit requirements. Consequently, companies doing business in member states having lax environmental compliance requirements and/or lax enforcement efforts, are essentially on the honor system to behave responsibly. The lack of a formal EU-wide system setting uniform standards for industry gives rise to environmental concerns. |
| The EMAS Regulation addresses such concerns by providing a system to improve the environmental performance of industrial activities and to increase corporate compliance with national and EU environmental laws. While each individual EMAS requirement is designed to facilitate such objectives, four specific requirements are especially significant. First, companies must prepare an "Environmental Policy" establishing an overall corporate policy to achieve two main objectives: Continual improvement of the environment and compliance with environmental laws. Second, companies must generate a "Register of Environmental Effects," identifying significant environmental effects of their industrial sites. Third, an auditor must generate an "Audit Report" evaluating corporate fulfillment with EMAS requirements, including compliance with national and EU environmental law. Fourth, companies must complete an "Environmental Statement" identifying industrial sites that fulfill the EMAS requirements. |
| The documentation and disclosure of these four documents is designed exclusively to improve the environmental performance of industrial activities and to increase industry compliance with national and EU environmental laws. Two of the four documents — the "Environmental Policy" and the "Environmental Statement" — are intended for internal management. The other two are disseminated to the public, thereby enabling citizens to compare environmental policies and performance of companies in a more consistent manner than previously possible. Such disclosure is likely to make the company more accountable to the public. If industrial activities become more transparent, companies may be more inclined to improve their environmental performance. As an added incentive to improve environmental performance via the EMAS program, companies may be rewarded by enhancing their credibility and image as a responsible corporate citizen. |
| Although the other two documents — the "Register of Environmental Effects" and the "Audit Report" — are confidential documents, their potential role in facilitating responsible corporate behavior is also significant. Both documents require internal management to examine and document extensively the environmental impact of their industrial activities and to document their efforts to reduce such impacts. |
| Sovereignty Concerns: Unlike the Packaging Directive, the EMAS Regulation does not raise sovereignty concerns among member states. Infringement of member state sovereignty is not an issue for at least two reasons. First, because the EMAS Regulation is voluntary, industry is not required to participate.44 Companies may choose to follow the EMAS program, a member state(s) program, or no program at all. Second, the EMAS Regulation provides tremendous flexibility in obtaining EMAS certification, which further reduces sovereignty problems. For instance, a company may become registered as an EMAS site if it implements member state or international EMS and auditing programs that meet the EMAS requirements.45 In other words, companies may become EMAS-certified via other avenues aside from direct participation in the EMAS program. |
| As a result of the voluntary and flexible nature of the EMAS Regulation, the Regulation does not appear to compromise the sovereign rights of member states to follow national EMS and auditing programs. |
| European Harmonizing Laws Within the World Trade Organization (WTO) Scheme |
| The success of mandatory and voluntary laws in meeting unification goals, addressing societal problems, and satisfying environmental, trade, and sovereignty concerns depends [25 ELR 10201] not only on how member states and industry implement the laws, but also on how the laws will be governed, or restricted, within the international trade regime. For this reason it is important to examine the international trade regime that governs EU harmonizing laws. |
| The WTO/TBT Agreement |
| Perhaps the preeminent international trade regime is GATT based in Geneva. Since its inception in 1947, GATT has undergone numerous rounds of negotiations to reduce tariff and non-tariff barriers around the world. The most recent round of negotiations is the Uruguay Round of the GATT,46 which came to a successful conclusion on December 15, 1993, after more than seven years of negotiations. The Uruguay Round negotiations culminated with the WTO Agreement, which establishes a new WTO to replace the existing GATT institution. |
| All 15 member states and the EU as a whole are signatories to the WTO Agreement.47 Consequently, all member state and EU laws are subject to all provisions within the WTO Agreement. European environmental laws are most specifically governed by a separate agreement within the WTO Agreement: The TBT.48 The WTO/TBT Agreement is one of many individual agreements49 contained within the WTO Agreement. |
| The WTO/TBT Agreement governs "technical regulations"50 and" standards,"51 including environmental technical regulations and environmental standards.52 One of the important distinctions between the terms "technical regulation" and "standard" is that compliance with a technical regulation is mandatory, while compliance with a standard is voluntary. Based on the definitions in the WTO/TBT Agreement, the Packaging Directive would be classified as a "technical regulation," whereas the EMAS Regulation would be classified as a "standard." Importantly, the WTO/TBT Agreement treats mandatory and voluntary laws differently, subjecting them to separate and distinct provisions. |
| WTO/TBT Governance of Mandatory and Voluntary Laws |
| The WTO/TBT Agreement contains numerous provisions governing both mandatory environmental regulations and voluntary environmental standards. Some provisions seek to prevent WTO members from employing mandatory or voluntary environmental laws as protectionist tools. Other provisions are meant to preserve the ability of WTO members to set mandatory or voluntary environmental laws to address legitimate national environmental protection concerns. The WTO/TBT Agreement more significantly restricts mandatory environmental regulations than voluntary environmental standards. |
| One reason the WTO/TBT Agreement governs mandatory and voluntary environmental laws differently is that mandatory and voluntary environmental laws have the potential to impact international trade to varying degrees. Mandatory environmental regulations can affect trade significantly, and the impact is often obvious. For example, consider the trade effect of an environmental law banning the import or export of hazardous materials; or an environmental law banning the import/export of endangered species. Consequently, during the Uruguay Round negotiations, many governments called for stringent TBT provisions to ensure that mandatory environmental laws are not used as disguised barriers to trade. |
| The potential for voluntary environmental standards to effect international trade is not as great and their impact often less obvious. Consequently, neither previous GATT agreements nor the new WTO/TBT Agreement govern the voluntary standards as strictly. This relative flexibility is tremendously important because the role of voluntary environmental standards in the global economy is rapidly changing. The establishment of diverse voluntary "green" standards around the world has grown extensively, increasing the potential that voluntary standards may affect trade. For instance, consider the potential trade effect of a voluntary ecolabeling program that labels all domestic and imported furniture indicating whether or not the timber used to produce the furniture was "sustainably harvested." In recent years, industry and governments have become more aware of the trade implications of voluntary environmental standards. Currently, the international business community is feverishly working to develop international standards on a wide range of environmental issues.53 |
| There are several WTO/TBT provisions that are relevant to understanding the optimal form of EU harmonizing laws. Some of these provisions govern both mandatory and voluntary environmental laws in similar ways. Other provisions strictly govern mandatory environmental regulations but not voluntary standards. How these WTO/TBT provisions are implemented might play a critical role in influencing the preparation, adoption, and implementation of existing and future harmonizing environmental laws. |
| WTO/TBT Provisions That Govern Mandatory and Voluntary Laws Similarly |
| WTO/TBT Provisions on International Standards: The WTO/TBT Agreement states that with regard to mandatory regulations and voluntary standards, where relevant international [25 ELR 10202] standards exist or their completion is imminent, they "shall [be used], or the relevant parts of them [be used], as a basis of [the technical regulations or standards] except when such international standards . . . would be ineffective or inappropriate."54 This provision allows WTO members to implement national mandatory environmental regulations and voluntary environmental standards that are more stringent than international standards. Consider an international standard that bans international trade in 20 product categories made with, and containing, chlorofluorocarbons (CFCs). Country A adopts a mandatory law banning the export/import of 10 additional product categories made with, or containing, CFCs. Country B adopts a voluntary program labeling 30 product categories that are made with, or contain, CFCs. WTO members might challenge the Country A and Country B laws by arguing that the mandatory regulation and voluntary standard are more stringent than the international standard and are negatively affecting international trade. If so challenged, countries A and B could cite this WTO/TBT provision and argue that the international standards on CFCs are not effective or appropriate in addressing national health and environmental concerns regarding CFCs. |
| WTO/TBT Provisions on Transparency: The WTO/TBT Agreement contains provisions to ensure that both mandatory environmental regulations and voluntary environmental standards are prepared, adopted, and implemented in an open and transparent manner. These transparency provisions are meant to reduce the possibility that national regulations and laws create trade barriers. |
| For example, the WTO/TBT provision addressing transparency of mandatory regulations provides the following. When relevant international standards do not exist, and a technical regulation may have a significant effect on trade of other WTO members, members shall: Publish notice that they propose to introduce the regulation; notify other members of the products to be covered by the proposed regulation; provide copies of the proposed regulation; and allow time for members to comment.55 |
| The WTO/TBT contains similar transparency provisions that govern voluntary standards. The Agreement provides that at least once every six months, the standardizing body56 shall publish a work program describing standards under development and standards recently adopted.57 Before adopting a standard, standardizing bodies "shall allow a period of at least sixty days" to receive comments from members on draft standards.58 Once the standard has been adopted, "it shall be promptly published."59 |
| WTO/TBT Provisions That Govern Mandatory Regulations More Strictly |
| Mandatory environmental regulations are subject to other more stringent WTO/TBT provisions than are voluntary environmental standards. The WTO/TBT Agreement contains provisions that specifically restrict and govern the preparation, adoption, and application of mandatory technical regulations. Two particular WTO/TBT provisions illustrate that mandatory environmental regulations are subject to more rigorous rules and procedures than are voluntary environmental standards. |
| WTO/TBT Provisions on the "Least Trade Restrictive Test": The WTO/TBT requires WTO members to ensure that mandatory technical regulations "not be more trade-restrictive than necessary to fulfil a legitimate objective,60 taking account of the risks non-fulfillment would create."61 In assessing such risk,62 WTO members may consider, inter alia, "available scientific and technical information, related processing technology or intended end uses of products."63 |
| This WTO/TBT provision is known as the "Least Trade Restrictive" (LTR) test. The application of this test is fairly straightforward. For example, mandatory environmental regulations such as the Packaging Directive, must not be implemented or applied in a manner that impedes trade more than necessary to achieve environmental protection goals, i.e., reducing packaging waste. If a WTO member finds that the Packaging Directive distorts trade between itself and an EU member state, the WTO member may challenge the Directive as violative of this WTO/TBT provision. Significantly, voluntary standards are not subject to the stringent LTR test. |
| WTO/TBT Provisions on Dispute Settlement: The WTO/TBT contains provisions allowing WTO members to consult and resolve disputes relevant to the WTO/TBT Agreement. The Agreement calls for a "Committee on Technical Barriers to Trade" to meet as necessary, but no less than once a year, to facilitate WTO member consultation.64 The Agreement also establishes dispute settlement procedures for resolving disputes regarding "any matter affecting the operation of this Agreement."65 |
| Theoretically, consultations and disputes involving either mandatory regulations or voluntary standards may follow the above-cited procedures. On a practical level, however, formal consultation and dispute procedures are likely to be followed only in cases involving mandatory regulations. Consultations and disputes regarding voluntary standards are likely to be handled in a more informal, less stringent manner. In fact, the WTO/TBT Agreement states that standardizing bodies shall provide adequate opportunity for consultation regarding the preparation, adoption, and application of standards and "shall make an objective effort to solve any complaints."66 Based on this new provision and past experiences of the Committee on Technical Barriers [25 ELR 10203] to Trade, consultations and disputes involving voluntary standards are not likely to be handled by WTO government members via the formal Committee process. Rather, they will probably be handled through a less formal process run by nongovernmental standards organizations. |
| The implication of these provisions is that mandatory environmental regulations will be subject to formal dispute settlement procedures, which may mitigate potential trade conflicts. In contrast, voluntary environmental standards will likely be subject to an informal dispute settlement process, which may not be as effective in resolving potential trade conflicts. |
| Optimal Structure for EU Harmonizing Laws |
| An assessment of the optimal structure for EU harmonizing environmental laws should consider at least two broad criteria. First, the effectiveness of employing a mandatory or voluntary approach in a harmonizing environmental law. Second, the impact of WTO provisions on mandatory and voluntary EU harmonizing environmental laws. |
| In considering the first criteria, this Article compared the effectiveness of mandatory and voluntary approaches in addressing three factors underling an EU harmonizing environmental law: Enhancement of environmental protection in the EU; unimpeded trade within the EU; and preservation of member state sovereignty. Throughout the Article, the Packaging Directive served as a model of a mandatory approach, while the EMAS Regulation served as a model of a voluntary approach. Because neither law has yet entered into force, it is not possible to identify conclusively the effectiveness of each approach. Nonetheless, review of the strengths and weakness of each law reveals that overall, the mandatory approach presents greater opportunities to address environmental, trade, and sovereignty factors. |
| The Packaging Directive sets mandatory minimum recovery and recycling standards to facilitate environmental protection goals within the EU. The minimum standards will push lax member states to meet minimum packaging reduction standards. Additionally, the Directive employs maximum standards to ensure that national packaging programs of environmentally aggressive member states do not disrupt recovery and recycling systems of neighboring members. The mandatory nature of the Directive also facilitates trade objectives within the EU. By imposing mandatory maximum packaging standards, the Directive seeks to prevent national programs from becoming trade barriers between member states. |
| To some extent, the Packaging Directive also preserves member state sovereignty. Because the instrument of law is a Directive, member states may devise their own methods and means to achieve the targets set in the law. For example, member states are given extensive flexibility in establishing national recovery and recycling systems. However, the mandatory maximum standards may, in fact, impede the sovereign ability of member states to set national packaging programs more stringent than the EU harmonizing law. The Packaging Directive requires member state goes beyond the maximum packaging standards set in the EU Directive. |
| The Packaging Directive lacks a voluntary, market-oriented component to encourage and reward member states and industry to achieve high packaging recovery and recycling rates. Perhaps the mandatory approach employed by the Packaging Directive could be enhanced by including a voluntary aspect, such as a voluntary ecolabel program. The ecolabel might be used to identify packaging products that are achieving the highest recovery and recycling targets set in the Packaging Directive. This voluntary component could encourage member states and industry to achieve the upper bound packaging targets set in the law. |
| The voluntary approach the EMAS Regulation employs presents important strengths in addressing environmental, trade, and sovereignty factors. Overall, however, the approach may not be as effective as the mandatory structure the Packaging Directive uses. Perhaps the greatest strength of the EMAS Regulation is that the law does not pose a significant threat to member state sovereignty. The Regulation allows member states to choose to participate in national, EU, or international environmental management systems and auditing schemes. |
| The EMAS program sets one uniform standard for EMS and auditing, which may reduce economic and trade burdens of industry. The EMAS program also presents an important opportunity for industry to improve their environmental performance and communicate their efforts to the public. Natural market behavior may encourage companies to participate in the EMAS program if consumers preferentially purchase products from EMAS-certified companies. |
| The voluntary nature of the EMAS Regulation, however, presents a noteworthy weakness. Because the Regulation is voluntary, industry may choose not to follow the EMAS program. Instead, industry might follow different national EMS and audit programs. If this occurs, the EMAS program may not effectively harmonize different member state programs, thereby limiting the law's ability to address both trade and environmental concerns. |
| Clearly there are important strengths and weaknesses of both the mandatory and voluntary approach to EU harmonizing environmental laws. Perhaps the optimal structure for an EU harmonizing law will contain mandatory minimum and maximum environmental standards in addition to a voluntary industry program that encourages industry to attain the maximum standards. The effectiveness of each approach may become more apparent in the near future as the Packaging Directive and the EMAS Regulation are fully implemented within the EU. |
| The second broad criteria relevant in assessing the optimal structure for EU harmonizing environmental laws is the potential impact of WTO provisions on mandatory and voluntary environmental laws. The new WTO/TBT Agreement contains provisions that appear to treat both mandatory and voluntary laws similarly, e.g., provisions regarding transparency and the use of international standards. There are, however, several WTO/TBT provisions that clearly govern mandatory environmental laws more stringently than voluntary environmental standards, e.g., the LTR provision. |
| This discrepancy in how the WTO/TBT Agreement governs mandatory and voluntary laws may influence the EU Commission as it drafts and proposes future EU harmonizing environmental laws. For instance, in light of stringent WTO/TBT provisions, to which mandatory laws will be subject, the Commission may propose more EU harmonizing environmental laws that are voluntary. In fact, such a shift might also be supported by a growing trend in Europe [25 ELR 10204] to address environmental problems in a more proactive industry-oriented manner in lieu of imposing more government regulations. |
| The task of harmonizing diverging member states' environmental laws, however, may not always lend itself to using a voluntary approach. Furthermore, stringent WTO/TBT provisions may not dissuade the EU from adopting aggressive mandatory environmental laws. Only the test of time will shed light on the question of how the new WTO provisions will influence future and existingenvironmental laws, not only in Europe, but around the world. |
| Conclusion |
| Despite the bold challenges and unique opportunities the Maastricht Treaty holds for Europe, its actual implementation has proved arduous. Fitting just one piece, the environmental piece, into the Maastricht puzzle has given rise to numerous vexing questions. Europe must move carefully in coming years as member states construct a common European environmental policy to guide the national policies of the 15 unique member states. |
| European harmonizing laws serve the important purpose of unifying member state environmental laws while concomitantly addressing critical trade, environmental, and sovereignty concerns. Yet the ability of any law to promote this effort depends almost as much on its substance as it does on its structure or approach. At this stage in the Masstricht process it is difficult to identify conclusively one approach — mandatory versus voluntary — as optimal. Nonetheless, it appears that the unification process may benefit by employing a combination of mandatory and voluntary provisions. |
| The success and effectiveness of the Packaging Directive and the EMAS Regulation may come under formal review in 1996, when the EU will hold an intergovernmental conference to review past, present, and future unification efforts that the Maastricht Treaty prescribed. In their review of environmental unification efforts, the institutions of the EU may consider the impact and implications of the new WTO/TBT Agreement on mandatory and voluntary environmental laws. As discussed in this Article, the WTO/TBT Agreement clearly governs mandatory environmental laws more stringently than voluntary environmental laws. This situation may help to shape the preparation, adoption, and implementation of existing and future EU harmonizing environmental laws. The success and effectiveness of each law in meeting unification, trade, environmental, and sovereignty goals depends also on how the laws will be governed by the WTO. WTO members are likely to watch mandatory environmental regulations closely to ensure that the laws do not create trade barriers to the European market. In contrast, WTO members may give less scrutiny to voluntary environmental standards, such as the EMAS Regulation. |
| The EU has accepted a formidable challenge to integrate the environmental policies of 15 countries, each having unique cultural, social, and economic priorities. Europe's unification efforts are likely to attain numerous achievements and run up against numerous obstacles in coming years. Governments, industry, and environmentalists should watch closely as Europe forges its future environmental policy. The size and shape of the EU's environmental policies are likely to have a profound impact on the international community. |
| 1. Treaty Establishing the European Economic Community, Mar. 25, 1957, 298 U.N.T.S. 11. |
| 2. Treaty on European Union, 1992 O.J. (C 224/1). |
| 3. Unification should increase competition within the EU, as well as make the EU more competitive with international trading partners. |
| 4. The EU currently consists of 15 member states: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom. Austria, Finland, and Sweden acceded to the EU on January 1, 1995. |
| 5. Generally, the northern European nations, which are highly industrialized, have stringent environmental standards. In contrast, southern European nations, which are less economically developed than the northern European nations, generally have less stringent environmental standards. |
| 6. Headquartered in Brussels, the European Commission serves as executive of the EU's affairs. The Commission ensures that the EU and member states follow provisions of the Treaty of Rome. The Commission is the only institution with legal authority to propose legislation on behalf of the EU. |
| 7. European Parliament and Council Directive on Packaging and Packaging Waste, 1994 O.J. (L 365/10) [hereinafter Packaging Directive]. |
| 8. Council Regulation Allowing Voluntary Participation by Companies in the Industrial Sector in a Community Eco-Management and Audit Scheme, 1993 O.J. (L 168/1) [hereinafter EMAS Regulation]. |
| 9. The European Council of Ministers consists of 15 ministers who each hold office in their respective member states. The Council is the ultimate decisionmaking body in the EU on most issues. The Council discusses, amends, adopts, and/or rejects Commission-proposed legislation. The Council convenes in Brussels and Luxembourg, where each member state is represented by their Council Minister. |
| 10. Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Dec. 15, 1993, MTN/FA UR-93-0246 [hereinafter WTO Agreement]. |
| 11. Id. at MTN/FA II-A1A-6, Agreement on Technical Barriers to Trade [hereinafter WTO/TBT Agreement]. |
| 12. The two European instruments of law, directives and regulations, are significantly distinct from one another. "Directives" legally bind member states to achieve the objectives set forth in a law while allowing member states flexibility in choosing the methods to achieve a directive's goals. In contrast, "Regulations" legally bind member states to both the objectives of the regulation and specific methods to achieve the goals. Most European environmental legislation is in the form of directives. Regulations are the second most frequently used instrument. Both directives and regulations may be mandatory or voluntary. |
| 13. Commission Adopts a Proposal for a Directive on Packaging and Packaging Waste, 1992, Press Release from the Commission (Doc. No. P/92/42) (on file with author). |
| 14. See Packaging Directive, supra note 7. |
| 15. Id. art. 3. |
| 16. Id. art. 6. |
| 17. Id. art. 7. |
| 18. These 10 member states are Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Spain, Sweden, and the United Kingdom. |
| 19. European directives and regulations often contain "essential requirements" relating to safety, health, or environmental issues. The requirements set legal limits or targets, or establish criteria for evaluating compliance with the legal limits or targets. Essential requirements are not in and of themselves standards. Once a proposed law is adopted, the Comite Europeen de Normalisation (CEN) develops standards codifying the essential requirements in an EU law. CEN is a quasigovernmental standards body for the EU. |
| 20. Packaging Directive, supra note 7, art. 9. |
| 21. Id. art. 6. |
| 22. In particular, Greece, Ireland, and Portugal do not have formal packaging programs. |
| 23. Ordinance on the Avoidance of Packaging Waste, (Verpackungsverordnugn — Verpack VO), BGB 1.IIF.1234, June 12, 1991. |
| 24. Packaging that meets requirements of the German Packaging law are eligible to receive a "Green Dot" in exchange for a fee incurred by manufacturers. The presence of a green dot on the product enables the Duales System Deutschland to collect the packaging material, instead of having the manufacturer, distributor, or retailer take it back. |
| 25. Duales System Deutschland Says It Recovered More Than Half of all Used Packaging in 1993, Int'l Envtl. Rep. (BNA) No. 6, at 273 (Mar. 23, 1994). |
| 26. For example, Denmark's packaging law heavily targets drink containers. The law requires that any beer or water bottles produced or sold in Denmark must be refillable. One-way drink containers are banned in Denmark. The Netherlands' packaging law has a measure turned at phasing out packaging made of polyvinyl chloride, a type of plastic. |
| 27. According to the European Statistical Office, particular member states achieved the following recycling rates in 1993. Paper recycling: 66 percent in Germany; 50 percent in the Netherlands. Glass recycling: 55 percent in Germany: over 50 percent in Belgium, Denmark, and the Netherlands. The member state rates are higher than the 45 percent recycling rate set in the Packaging Directive. U.S. Generates More Waste Than Europe, Also Recycles Less, European Office Says, Int'l Envtl. Rep. (BNA) No. 4, at 165 (Feb. 23, 1994). |
| 28. Article 100a(4) of the Treaty of Rome allows member states to apply more stringent measures for major needs or for environmental protection after an EU harmonizing law is passed. Article 100a(4) does not automatically grant this "opt-out" right to member states but rather, it requires the Commission to verify that the member state law in question is "not a means of arbitrary discrimination or a disguised restriction on trade between the member states." Treaty Establishing the European Economic Community, Mar. 25, 1957, 298 U.N.T.S. 11. |
| 29. The European Court of Justice (ECJ) consists of 16 judges, one from each of the 15 member states and a president. The ECJ hears cases involving disputes between member states about EU laws and disputes involving the implementation of an EU law. |
| 30. Packaging Directive, supra note 7, art. 6. The three members must either meet initial targets in the EU Packaging Directive by December 2005 or meet lower targets while achieving at least a 25 percent recovery target within five years of the Directive's implementation. |
| 31. Id. |
| 32. The EU Commission must examine and approve national packaging programs to ensure that: (1) the program has adequate infrastructure capacity to meet higher recycling and recovery targets; (2) the program does not distort internal markets of the EU; and (3) the program does not affect other member states' ability to comply with the EU Packaging Directive. Id. |
| 33. See EMAS Regulation, supra note 8, art. 21. |
| 34. Id. art. 1. |
| 35. The EMAS program is voluntary in that companies are not obligated to participate. Yet companies choosing to participate "must" fulfill the program's requirements. |
| 36. EMAS Regulation, supra note 8, art. 3. |
| 37. Id. art. 4. |
| 38. Id. art. 5. |
| 39. The International Standardization Organization in Geneva is currently developing international standards for environmental management systems and for eco-auditing. |
| 40. The member states include France, Germany, Ireland, Italy, the Netherlands, Sweden, and the United Kingdom. |
| 41. For example, the United Kingdom's national program lays out extensive industry requirements that include setting up EMSs that document past, present, and future corporate activities having an impact on theenvironment. Specification for Environmental Managment Systems, British Standards Institute, BS 7750:1992, ISBN 0 58020 20644 0. Italy's national program requires companies to file an annual "eco-return" declaring corporate compliance with existing environment, health, and public safety legislation. Law Sets Stage for Implementing EU Rule on Eco-Audits, Requires Annual "Eco-Return," Int'l Envtl. Rep. (BNA) No. 4, at 170-71 (Feb. 23, 1994). Germany's program is informal and only a few large companies participate, but they do include their corporate environmental reports as annexes to their annual financial statements. Id. |
| 42. The EU speaks to this issue of uniformity in paragraph 16 of Chapeau to the EMAS Regulation: "whereas, in order to ensure an equal implementation of the scheme throughout the Community, the rules, procedures and essential requirements have to be the same in each Member State; . . ." EMAS Regulation, supra note 8, Chapeau, para. 16. |
| 43. Id. art. 12. |
| 44. Id. Chapeau, para. 16. |
| 45. Id. art. 12. |
| 46. WTO Agreement, at MTN/FA UR-93-0246. |
| 47. The WTO Agreement, with 125 signatories, came into effect January 1, 1995. Government signatories to the WTO Agreement are "WTO members." |
| 48. WTO Agreement, at MTN/FA II-A1A-6, WTO/TBT Agreement. |
| 49. Examples of individual agreements contained within the WTO Agreement include the Agreements on Agriculture; Sanitary and Phytosanitary Measures; Textiles and Clothing; and Subsidies and Countervailing Measures. |
| 50. The WTO/TBT Agreement defines a "technical regulation" as a document that sets "product characteristics," e.g., size or shape, "or their related processes and production methods," i.e., how the product was made, "with which compliance is mandatory." Id. Annex 1, para. 1. |
| 51. The WTO/TBT Agreement defines a "standard" as a document that provides "rules, guidelines or characteristics for products or related processes and production methods" for common and repeated use, "with which compliance is not mandatory." Id. Annex 1, para. 2. |
| 52. The WTO/TBT Agreement also covers "conformity assessment procedures," which are used "to determine [whether] relevant requirements in technical regulations or standards are fulfilled." Id. Annex 1, para. 3. |
| 53. In 1993, the Geneva-based International Standardization Organization established Technical Committee 207 (TC 207) to examine the growing number of national voluntary environmental standards worldwide. TC 207 is charged with establishing international voluntary industry standards for a wide range of issues, including environmental management systems, eco-auditing, eco-labeling, and life-cycle assessment. |
| 54. WTO/TBT Agreement, supra note 11, art. 2.4 (addressing regulations); WTO/TBT Agreement, supra note 11, Annex 1(f) (addressing standards). |
| 55. Id. art. 2.9. |
| 56. Standardizing bodies are organizations that set standards. They are usually nongovernmental organizations. |
| 57. WTO/TBT Agreement, supra note 11, Annex 1(j). |
| 58. Id. Annex 1(l). |
| 59. Id. Annex 1(o). |
| 60. "Legitimate objectives" include, inter alia, the "protection of human health or safety, animal or plant life or health, or the environment." WTO/TBT Agreement, supra note 11, art. 2.2. |
| 61. Id. |
| 62. The risk of nonfulfillment refers to the risk of not fulfilling a legitimate objective, such as the protecting the environment or human, animal, or plant health. |
| 63. Id. |
| 64. The Committee on Technical Barriers to Trade is composed of government representatives from each WTO member. WTO/TBT Agreement, supra note 11, art. 13. |
| 65. Id. art. 14. |
| 66. Id. Annex 1(q). |
25 ELR 10195 | Environmental Law Reporter | copyright © 1995 | All rights reserved
