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Environmental Ethics, Environmental Law, and Trade


Environmental Ethics, Environmental Law, and Trade Objectives Show how law is sometimes used to embody ethical principles, particularly in environmental law Show how ... – PowerPoint PPT presentation

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Title: Environmental Ethics, Environmental Law, and Trade

Environmental Ethics, Environmental Law, and Trade
  • Show how law is sometimes used to embody ethical
    principles, particularly in environmental law
  • Show how how trade policy can undercut the
    ethical principles embodied in domestic law.
  • Relate these ideas to issues in the news

Ethics and the Law
  • Law reflects the ethical judgments of a society.
  • Ethics serves as a basis for laws, changes in law
    reflect changing ethical views.
  • Environmental law embodies shared ethical values.

Ethical Principles in Environmental Law
  • The Polluter Pays Principle
  • The Precautionary Principle

The Polluter Pays Principle
  • Dont make messes.
  • If you make a mess, clean it up.
  • Pollution is an externalitya cost not borne by
    the parties to a transaction. Goalinternalize
    the costs of pollution.
  • The polluter pays principle is an internalization
    strategy embodied in U.S. law.
  • Superfund, CERCLA, RCRA, USTA

The Precautionary Principle
  • Take precautionary measures to anticipate,
    prevent or minimize environmental harm. Rather
    than await certainty, regulators should
    anticipate potential environmental harm and act
    to prevent it.
  • International treaties, some signed by the U.S.,
    expressly adopt the precautionary principle.
  • Rio Declaration, Cartagena Protocol (SPS treaty),
    Kyoto Protocol

Trade Policy, Domestic Law, and Environmental
  • Trade policies and trade agreements (NAFTA, WTO,
    FTAA) can undercut domestic environmental
    protection laws.

NAFTA Provisions
  • NAFTA protects the property rights of foreign
  • No direct or indirect expropriation without
  • Indirect expropriation is sometimes called
    Regulatory Taking
  • NAFTA allows a foreign citizen or corporation to
    sue a government for improper expropriation.

Protecting Property Rights
  • Governments MUST protect rights to private
    property against unjust takings
  • The Fifth Amendment states
  • No person shall be . . . deprived of life,
    liberty, or property, without due process of law
    nor shall private property be taken for public
    use without just compensation.
  • The expropriation clauses build this requirement
    into trade agreements

Kinds of Takings
  • Property can be taken directlyas in imminent
    domainfor public uses.
  • Property can be taken indirectlyits value
    greatly reduced or eliminatedby government
    regulations that impose costs or limit profits.
  • Regulatory takings cases havent worked well in
    U.S. courts.
  • Exception Lucas v. South Carolina Coastal Comm.
  • Regulatory takings theory limits government too

Environmental Law and Expropriation
  • Environmental laws tend either to impose direct
    costs on, or to limit the profitability of, some
  • Foreign corporations claim that domestic
    environmental laws indirect expropriations for
    which they are entitled compensation from the
    government (taxpayers).

NAFTA cases undercutting environmental law
  • Ethyl Corp v. Canada
  • Methanex Corporation v. United States
  • S.D. Meyers Corporation v. Canada

Ethyl Corp. v. Canada
  • Ethyl makes a gasoline additive
    Methylcyclopentadienyl Manganese Tricarbonyl
    (MMT) to reduce emissions
  • MMT is banned in several states as a health risk.
  • Canada banned MMT as a health risk.
  • Ethyl sues Canada under Chapter 11 for illegal
    expropriation for LOST PROFITS!
  • Ethyl WINS.

Methanex Corp. V. U.S.
  • Methanex is a Canadian corporation that makes
    methyl tertiary-butyl ether (MTBE) an oxygenate
    gasoline additive.
  • MTBE was banned by California because of its
    perceived threat to humans and the
    water supply.
  • Gov. Davis found "on balance, there is
    significant risk to the environment from using
    MTBE in gasoline in California."
  • Methanex claims that the science supporting the
    ban is inadequate, despite evidence that MTBE
    causes cancers in some lab animals.

Methanex, continued
  • Methanex sued the U.S. for 970 million, claiming
    that Californias environmental regulation
  • The MTBE ban illegally prefers a U.S. product
  • Constitutes an illegal expropriation of profit
  • This case constitutes "a clear threat to
    California state sovereignty and democratic

S.D. Meyers
  • S.D. Meyers deals in treating toxic wastes,
    specializing in PCBs. S.D. Meyers processes
    contaminated transformers, some imported from
  • Acting under the Basel Convention on
    Transboundary Shipment of Hazardous Waste, Canada
    bans the export of PCB contaminated transformers.

Meyers, continued
  • Meyers sues Canada for having expropriated its
    profits by banning exports (thus giving the
    profits to Canadian corporations).
  • Remember, international treaty law bans the
    transboundary shipment of toxic waste.
  • S.D. Meyers WINS.

A Few More Outrageous Cases Under NAFTA Chapter 11
  • Sun Belt Water, Inc. v. Canada
  • Pope and Talbot v. Canada
  • Metalclad Corporation v. Mexico

Sun Belt Water, Inc.
  • Fortune Magazine says water will be to the 21st
    century what oil was to the 20th.
  • 20 of the worlds fresh water is in Canada
  • SUN BELT undertakes commercial and humanitarian
    projects dealing with water.
  • Sun Belt serves markets in the U.S. Southwest
    (Oakland, San Francisco, San Rafael, Santa Cruz)
  • Sun Belt wanted to import Canadian water from BC
    to sell in the U.S.

Sun Belt, Continued
  • Sun Belt formed a partnership with Snowcap, a
    Canadian water company
  • Sun Belt won a contract to supply water to Santa
    Barbara (beating a Canadian firm, WCW)
  • B.C. citing the Water Protection Act, denied Sun
    Belt/Snowcap the needed export licenses.
  • Sun Belts 400 million NAFTA suit is pending.
  • Sun Belt's CEO Jack Lindsay says, "Because of
    NAFTA, we are now stakeholders in the national
    water policy in Canada.

Pope and Talbot
  • Pope Talbot is a small, U.S. based lumber firm
    operating in Canada.
  • Timber imports and exports have been the subject
    of controversy between the U.S. and Canada for
  • 1996U.S./Canada Softwood Lumber Agreement (SLA)
    set export quotas, levies and production taxes.

Pope Talbot, cont.
  • Pope Talbot was adversely affected by the SLA
    (which the U.S. negotiated)
  • Pope Talbot sued Canada, and won, claiming that
    Canada had breached NAFTA duties on national
    treatment and minimum standards of treatment.
  • A U.S. firm successfully sued Canada because of a
    treaty other U.S. firms had lobbied the U.S.
    govt to force on Canada.

Metalclad v. Mexico
  • Metalclad Corp is a U.S. based waste disposal
  • Metalclad constructed and began operating a waste
    disposal facility in Guadalcazar in the state of
    San Luis Potosí.
  • Metalclad did not have full local approval for
    the plant, but claimed it had assurances from
    the Mexican federal government.
  • The plant leaked, was located on an alluvial
    stream, and contaminated local groundwater.

Metalclad, continued
  • The governor of San Lois Potosi declared a
    600,000 acre environmental protection zone and
    ordered the plant closed as an environmental
  • Metalclad sued for 90 million for lost costs,
    expropriated profits, and an order that it be
    allowed to reopen the plant.
  • Metalclad won 19.7 million in damages and rhe
    right to reopen the plant.

Technical Trade Barriers and the WTO
  • The WTO promotes free trade
  • Prohibits formal trade barriersquotas, import
    limits, import taxes, price supports
  • The EU Caribbean bananas case
  • Prohibits technical barriers to trade as
    disguised quotas or tariffs
  • Some workplace health and safety laws, consumer
    protection laws and environmental regulations
    have been found to be technical trade barriers

The Turtle and Beef Hormones Cases
  • 2 of the most famous (infamous) cases to go
    before the WTO.
  • Each case raises questions about domestic
    sovereigntythe right of the people of a nation
    to make their own laws.
  • These cases are at the heart of the protests in
    Seattle at the WTO ministerial conference in 2000
    and the IMF/World Bank Protests in Washington
    and Montreal in 2001.
  • In 2002, the WTO met in Doha, Qatar.

The Turtle Case
  • Congress passed a law stating that all shrimp
    sold in the U.S. had to be caught in turtle safe
  • Caribbean shrimpers sought U.S. help in meeting
    the deadline set in the law.
  • Asian shrimpers did not comply with the law.
  • The EPA extended the deadline for full
  • A court ordered the EPA to enforce the law fully
    and the EPS banned the sale Asian shrimp not
    caught in turtle safe nets.

Turtle case, continued
  • Asian shrimpers sued in the WTO DRB arguing that
    the U.S.s environmental law was a technical
    trade barrier, a disguised tariff, and not really
    about protecting turtles.
  • That ALL domestic U.S. shrimpers, and ALL imports
    were subject to the same rules didnt matter.
  • The WTO ruled against the U.S., forcing either a
    dropping of the requirement or facing retaliatory

The Beef Hormones Case
  • The Montreal codicil to the UNs treaty on
    Sanitary and Phytosanitary Measures (SPS)
    explicitly adopts the precautionary principle as
    a basis for making food safety decisions.
    (article 57)
  • The EU banned administering substances having
    thyrostatic, estrogenic, androgenic or gestagenic
    action to farm animals AND it banned the sale of
    meat from animals to which such substances had
    been administered as a precautionary health

Beef Hormones, cont.
  • These rules applied to EU beef producers and to
    beef importers.
  • U.S. and Canadian beef producers, who use growth
    hormones to fatten cattle, sued under WTO rules.
  • As in the turtle case, the producers argued that
    these were TBTs and not real safety measures.
  • The U.S. and Canadian beef producers won.
  • What happened to domestic sovereignty?

  • The FTAA, the Free Trade Area of the Americas,
    would extend NAFTA all over North and South
    America (except Cuba).
  • It would extend NAFTA to include services.
  • Services is a huge category of economic
    activity including extractive industries, mining,
    shipping, construction, and waste processing and
  • Water rights and the privatization of water
    resources would be included.

How does all this relate to my life or to issues
in the news today?
  • Trade protests (the Battle in Seattle, the riots
    in Montreal in 2001, attempts to protest the WTO
    ministerial in Doha, Qatar) turn on these issues.
  • Domestic sovereignty, our right to make our own
    laws and to embody our ethical convictions in
    law, is at risk.
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