APH28 - Casas Baratas en Barrio Agronomía

First, Next Generation disputes are being litigated not only at the WTO but also in trade remedies proceedings before domestic administrative agencies. While such proceedings are subject to oversight by WTO rules, they have the advantage of allowing governments to take quick unilateral action without waiting for costly and time-consuming multilateral review.225

Nevertheless, the development of a second channel for trade dispute litigation presents its own risks. Without a neutral multilateral body serving as an impartial adjudicator, the outcome of these administrative proceedings may be seen as politically motivated. Aggrieved parties will put pressure on their own government to respond in kind. This gives rise to an increased risk of a unilateral action sparking a tit-for-tat trade dispute. The Sino–American and Sino–European trade rows over solar panels provide a disturbing lens into how such disputes can evolve into a brewing trade war.226

Furthermore, the options for postjudgment compliance differ dramatically when a ruling stems from a WTO proceeding as opposed to a domestic trade remedy proceeding. We will elaborate further on this difference and the resulting implications in Part IV when we assess potential options for legal reform. For now, it is sufficient to note that the rise of green industrial policies has opened the door to trade and environment disputes being subject to domestic administrative proceedings in addition to WTO proceedings. This presents new risks for escalating trade tensions.

B. “Good” Versus “Bad” Actors: It’s Become Much More Complicated

Second, the rise of Next Generation disputes has upended the Classic stereotype of the developed country as the environmentally friendly actor and the developing country as environmentally unfriendly. In many instances, the roles are now reversed. Often, it is the developing country that adopts the pro-environmental policy, and it is the developed country that seeks to have the policy declared illegal under WTO law. Even in instances where the country adopting the pro-environmental subsidy policy is a developed country (e.g., Canada’s feed-in-tariff program), it is its fellow developed countries that seek to have it terminated.227

To the extent that the defendant countries are viewed as “bad” actors, it is not because of their unwillingness to tackle environmental problems, but because of their demand for rents for their domestic industry in

225_{See supra Part II.C.2.} 226_{See supra Part II.C.2.}

exchange for pro-environmental actions. Such demands may reduce welfare overall and violate the spirit of international trade rules. Yet, even here, the case against them is not altogether clear. Some sympathize with the developing countries’ argument that they are being asked to bear a disproportionate cost for environmental harms caused primarily by developed countries.228 _{Developing countries have a pressing need to lift}

their populations out of poverty, and developed countries have steadfastly refused to make the standard-of-living sacrifices necessary to move toward developing countries’ much lower per capita emissions rates. To some, this quid pro quo demand may appear reasonable, especially when trade law carves out exceptions to allow for other welfare-reducing rents that reflect historical realities.229

Even with the export restrictions, China points out that it could simply follow the developed countries’ lead of limiting production and exporting the environmentally harmful processing steps to other countries.230 _{The fact}

that it chooses to bear this cost internally, some Chinese argue, should entitle it to tax others that “free ride” off the environmental harms that it internalizes.231 _{In levying such a tax, is China behaving as a mercantilist}

actor exploiting its natural resources for strategic gain? Or is China simply taking a more holistic view of supply chain externalities and forcing consumers to incur the cost of upstream environmental harms if they refuse to provide compensating positive externalities downstream? Would overall global welfare truly be better off, China asks, if it simply shut down production over environmental concerns, as the United States and others have done, thereby triggering a massive spike in input prices, instead of trying to remedy perceived differences in externalities through tax and quota policies? At the very least, these questions show that the situation is far less black-and-white than the earlier Classic cases.

228_{See, e.g., Mark A. Drumbl, Northern Economic Obligation, Southern Moral Entitlement, and}

International Environmental Governance, 27 COLUM. J.ENVTL.L. 363, 366 (2002); Amy Sinden,

Allocating the Costs of the Climate Crisis: Efficiency Versus Justice, 85 WASH.L.REV. 293, 295–96 (2010); Cheng Zheng-Kang, Equity, Special Considerations, and the Third World, 1 COLO.J.INT’L

ENVTL.L.&POL’Y 57, 62 (1990).

229_{For example, preferences given by former imperial powers to their former colonies were}

grandfathered and are permissible, in contravention of the most-favored-nation treatment requirement.

See GATT, supra note 12, art. I:2–3.

230_{China Defends Rare Earth Export Policy Adjustment, XINHUA (June 28, 2012, 6:45 PM),}

http://news.xinhuanet.com/english/china/2012-06/28/c_131682241.htm (quoting a Foreign Ministry spokesman asking other countries to boost their production); Lilian Luca, Transition to the Future:

Mining and Mineral Processing in China, CHINA ANALYST (May 2010), http://www.thebeijingaxis.com /tca/editions/the-china-analyst-may-2010/47 (suggesting that China will increasingly tap into mining and processing companies in developing countries as domestic environmental concerns grow and Chinese firms seek to expand global market share).