The relationship between trade and sustainable development is complex and challenging. In this chapter, I shall focus on one component of that challenge: the relationship between trade and environment. I shall argue that, contrary to general opinion, the environment has made significant progress in the World Trade Organization (WTO). This arises not so much from the progress in environmentally-related negotiations nor from the regular work of the WTO Committee on Trade and Environment (CTE), but from the work of the Dispute Settlement Body (DSB) and, in particular, the Appellate Body. While this has led to charges of ‘judicial activism’ on the part of the Appellate Body, I argue that the Appellate Body is simply fulfilling its mandate to clarify and interpret WTO law and to fill gaps left by negotiators.

Environment: a fraught topic in the WTO

Environment is a sensitive topic in the trade context. Although the fear is receding somewhat, the environmental community is still concerned that trade rules will be used to challenge and roll back environmental achievement at both the international and domestic levels. At the domestic level, to the extent that environmental regulations, norms or standards impinge on the freedom to conduct business, they are vulnerable to challenge as unwarranted interference with open trade. At the international level, multilateral environmental agreements (MEAs) that use trade measures to encourage and enforce compliance appear especially open to challenge, even though the trade measures contained in these agreements have been agreed by consensus by all parties and many of these agreements have more members than the WTO itself.