"The perfect is the enemy of the good.": the unilateral imposition of a meat tax : a legal analysis through international trade and environmental law

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“The perfect is the enemy of the

good”: the unilateral imposition of a

meat tax.

A LEGAL ANALYSIS THROUGH INTERNATIONAL TRADE AND

ENVIRONMENTAL LAW.

LAURA LUNDAHL

Master track International Public Law Promotor: Prof. Dr. René Lefeber

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“Le mieux est l’ennemi du bien.”

(“The perfect is the enemy of the good.”)

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Abstract

The purpose of this thesis is researching whether the current regimes of international climate change and trade law allow for the introduction of a unilateral meat tax in order to mitigate climate change. This research is done through qualitative research, from an external perspective and the legal analysis is descriptive in nature.

Climate change is an incredibly pressing transnational issue the world is facing today. Concordantly, international agreements have been made to try and grapple with this problem. This international climate change regime consists of the United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement, and all these instruments focus on anthropogenic greenhouse gas emissions. One major contributor to the total amount of greenhouse gases is animal agriculture. Therefore, this thesis analyses the unilateral imposition of a meat tax by a state in order to fulfil its obligations of reducing anthropogenic greenhouse gas emissions under international climate change law. This means the analysis of the latter is limited to the obligation of a state to reduce anthropogenic greenhouse gases.

Imposing a meat tax domestically makes it necessary to levy the same tax on imported products in order to level the playing field for all market players. Concordantly, a unilateral meat tax is not only an environmental measure but also constitutes a trade measure. Is the introduction of such a unilateral measure to combat climate change possible under the current WTO-rules? In order for a meat tax to not be seen as a restriction on free trade, and thus be allowed under the WTO-rules, it should be qualified as a Border Tax Adjustment (‘BTA’). Therefore, whether a meat tax can qualify as a BTA is the first analysis this thesis makes. In second order, this thesis discusses the hypothesis where a unilateral meat tax cannot be qualified as a BTA. This entails the measure is seen as a restriction of free trade. Such a restriction can nonetheless stand under the WTO-rules if it falls under one of the exception clauses of article XX GATT. Hence, this is the second analysis this thesis makes.

At the outset of this thesis, the ‘perfect’ tax to mitigate climate change is deemed to be a differentiated tax. However, after extensive analysis of the current WTO-rules, this thesis comes to the conclusion that the second-best option of a ‘good’ tax, namely a non-differentiated one, might be a more viable option for a state. However, this thesis also briefly highlights possible ways forward, whereby international trade law is not necessarily to be seen as a restriction for environmental policies but instead might offer a useful platform to effectively mitigate climate change.

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1 Introduction

The above artworks are illustrative of the issue that motivated the writing of this thesis. On both occasions, the artist purchased the basic ingredients for a lasagna. The remarkable difference between the receipt of 1995 and that of 2015 is that, while the price of all ingredients visibly raised, the price of meat remained practically unchanged.1_{With this diptych, the artist wants to express the changed}

state of welfare, with a new ratio between nature and mortality (the food) and nature and freedom (the price of the food).2

The same matter of contention is found in numerous newspaper articles, books, reports of different institutions and organizations, scholarly articles and so on. Just to name a few: the Dutch Advisory Council on environment and infrastructure was very clear past April when it issued a report stating that since the sixties the consumption of meat in relation to protein of crop origin has increased from 50/50 to 70/30, and is strongly urging to change these ratios. It further stated that the risks of animal

1_{The first receipt is in Belgian Francs (BEF) and the second one in Euro (EUR), and 1 EUR equals 40.5 BEF.} 2_{MHKA, Welfare State: Carrefour Market,}

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agriculture on public health and the pressure on the environment are no longer socially accepted.3 Alarm bells are ringing concerning the changing diet of some 70 percent of Indians. With one of the fastest growing markets of meat consumption, this raises a serious issue for our world, which is already trying to grapple with water scarcity and climate change.4 In Belgium the consumer is raising its voice and has started putting pressure on the supermarkets for ‘fair meat’. They want the big chain stores to guide them to the most ecologically responsible choice.5_{And in the US, Simon proposes a}

well-calculated 50 percent consumer tax on all animal foods.6_{This would lead to, among others, an}

expected 3,4 trillion-pound annual reduction in the emission of carbon dioxide equivalents.7

‘Meat is bad for the environment’, has practically become a battle cry for environmentalists, vegans and vegetarians and today’s ‘conscious-living’ people alike. But why exactly is meat bad for the environment? Is all meat bad for the environment? And if so, what can be done about it? The examples above, which are just the tip of the iceberg, illustrate that the problem of meat production and consumption is a global one. On top of that, we can say that the problem of climate change is inherently transnational. This begs the question: is the international community ‘the best man for the job’, or should we rely on the ancient-old national state structures to do the job?

1.1 Research Question and Research Objective

Starting from the premise that the classic workings of international law are in themselves not swift enough8_{to deal with the rapidly growing problem of climate change,}9_{and taking into account the}

extensive contribution of the meat industry to the problematic amount of greenhouse gases (‘GHGs’) in our atmosphere, this thesis will analyze the following research question: Can a state, taking into account the current regimes of international climate change and trade law, impose a unilateral meat tax to address the problem of climate change?

Starting from the hypothesis that a state wants to impose a unilateral meat tax, is this in conformity with its obligations under the regime of international climate change law? Climate change is an

3_{NOS, “Adviesraad: we moeten minder vlees eten”, 3 April 2018,}

https://nos.nl/artikel/2225620-adviesraad-we-moeten-minder-vlees-eten.html?npo_cc=126& , last visited 13 April 2018.

4_{J. WEBBER, “Forbes warns India’s growing meat consumption could lead to crisis”, 20 December 2017,}

https://www.livekindly.co/forbes-india-meat-consumption/ , last visited 13 April 2018.

5_{M. GOETHALS, “Consument zet warenhuizen onder druk voor eerlijk vlees”, De Standaard, 19 March 2018.} 6_{D. R. SIMON, Meatonomics, Conari Press, 2013, p.172.}

7_{Ibid., p.176.}

8_{A full analysis of the problems of international law is beyond the scope of this thesis. Reference is made to: P. SANDS,}

Principles of International Environmental Law, Cambridge, Cambridge University Press, 2003, 2nr edition, p.3-170.

9_{The use of national measures is supported by the literature on environmental policy. The latter stresses the importance} of the subsidiarity principle, whereby decisions should be taken at the lowest and most decentralized level as possible, also concerning global problems like climate change and biodiversity loss. H. STEINFELD, P. GERBER, T. WASSENAAR, V. CASTEL, M. ROSALES and C. DE HAAN, Livestock’s long shadow. Environmental Issues and Options, Rome, FAO, 2006, p.224.

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inherently inter- and transnational problem. Concordantly, there is a specific body of international instruments, namely climate change law, that tries to grapple with this problem. This thesis will look at the legal obligations of states under these instruments, and more specifically to the obligations concerning the reduction of GHG emissions.

The imposition of a meat tax is not only an environmental measure, when taken with an eye to reduce GHG emissions, but it is also a trade measure because it interferes with the international WTO-principle of free trade. This means a unilateral meat tax comes into the realm of international trade law. What unilateral actions are permitted under the WTO-rules? What does the principle of free trade entail? And, what are the possible exceptions thereto?

1.2 Methodology

Primarily, a documentary analysis of official data and consultation of newspaper articles was performed to establish the relevance of this topical issue. Secondly, this thesis makes use of a literature review in the field of law. Sources thereby consulted are mostly scholarly articles from international legal databases and books. On a more general note, this thesis takes consultation with the current state of two specific paradigms within international law. These are international climate change law and international trade law. Concordantly, this thesis looks into relevant case law that situates itself on the intersection of these two fields. Finally, this thesis is descriptive in nature and written from an external perspective.

1.3 Structure

Part 2 will briefly set out the well-known critical problem of climate change our planet and its inhabitants is facing today, and more specifically how animal agriculture is a large contributor to that problem. Part 3 will discuss the desirability of a meat tax to counteract the adverse effects of meat production on climate change, and the specific form such a meat tax would take. Part 4 will set out the international legal framework that surrounds the proposition of a unilateral meat tax. First, international climate change law and states’ obligations to reduce GHGs will be discussed. Second, international trade law as identified in the WTO-rules, and the possible exceptions thereto, will be elaborated on. Part 5 will briefly discuss the possibility of harmonizing these two branches of international law, and part 6 will conclude with an overview of the findings of this thesis. To conclude, this thesis will not look at the implementation of a meat tax, but will solely focus on whether or not a meat tax as unilateral measure is possible under the current regimes of international trade and environmental law, and what requirements such a measure would have to meet.

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2 The Negative Impact of Animal Agriculture on Climate Change

2.1 Problem: Climate change

“Human emissions of carbon dioxide and other greenhouse gases have changed the composition of the atmosphere over the last two centuries. This is expected to take Earth’s climate out of the relatively stable range that has characterized the last few thousand years, during which human society has emerged.”10

The increasing problem of climate change the world is facing today is accepted by all but a few scientists.11 A logical place to start would be with the reports of the International Panel on Climate Change (‘IPCC’), an organ created by the World Meteorological Organization and the United Nations Environment Program in 1988.12 The IPCC assesses the available scientific and socio-economic information on climate change and its impacts, and advises on the available options to mitigate and adapt to climate change. On request, it further provides advice of a scientific, technical and/or socio-economic nature to the Conference of the Parties (‘COP’) of the United Nations Framework Convention on Climate Change (‘UNFCCC’).13

Up until today the IPCC has generated five subsequent reports (1990, 1995, 2001, 2007 and 2013/2014), but the progressive understanding of climate change, as shown by the assessment reports of the IPCC, is slow.14 Only in its fourth report the IPCC explicitly acknowledged that the temperature rise of our climate system is ‘unequivocal’ and that the majority of the registered increase in temperature since the second half of the 20th century is ‘very likely’ caused by human activities.15 In its latest report the IPCC confirmed the latter, and even used the words ‘extremely likely’ to describe the anthropogenic nature of the rising global temperatures that are causing climate change.16

2.2 Sub-Problem: Animal Agriculture

“(…) the mass consumption of animals is a primary reason why humans are hungry, fat, or sick and is a leading cause of the depletion and pollution of waterways, the degradation and deforestation of the land, the extinction of species, and the warming of the planet.”17

10_{E. WOLF et al., “Climate updates: what have we learnt since the IPCC 5}th_{Assessment Report?”, Climate Updates,} November 2017, p.4.

11_{N. ORESKES, “The scientific consensus on climate change: How do we know we’re not wrong?” in E. LLOYD and} E. WINSBERG (eds.), Climate Modelling: Philosophical and conceptual issues, Cham, Palgrave Macmillan, 2018, p.31. 12_{Ibid., p.33.}

13_{IPCC report 2005.}

14_{P.M. DUPUY and J.E. VIÑUALES, International Environmental Law, Cambridge, Cambridge University Press, 2015,} p.143.

15_Ibid. 16_Ibid.

17_{B.G. HENNING, “Standing in livestock’s ‘long shadow’: the ethics of eating meat on a small planet”, Ethics and the}

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Since the UNFCCC, the Kyoto Protocol and the Paris agreement focus primarily on anthropogenic emissions, and because animal agriculture contributes considerably to that problem, the next part will analyze briefly the key points of the adverse impact of animal agriculture on climate change. The considerable contribution of livestock production to the total amount of GHGs was brought to the world’s attention by the Food and Agriculture Organization (‘FAO’). The latter revealed that no less than 18 percent of the total amount of GHG emissions was stemming from the sector of animal agriculture.18_{This is more than the total amount of GHG emissions coming from the entire transport}

sector.19

The most notorious GHGs are carbon dioxide (CO2), methane (CH4) and nitrous oxide (N20). The

first one forms the biggest issue because of the large quantities emitted in the atmosphere and its concentration, both of which are considerably higher in comparison to other GHGs. However, methane is finishing close second. Once emitted, methane remains present in the atmosphere for 9 to 15 years. This is problematic because this GHG is about 23 times20 more heat absorbent and retaining than its bigger brother carbon dioxide over a 100-year period.21 In the same vein the effect of nitrous oxide on climate change is found. Notwithstanding the fact that nitrous oxide is only present in our atmosphere in very small amounts, its heat capturing capacity is 296 times that of carbon dioxide and its atmospheric lifespan constitutes 114 years.22

Animal agriculture as a sector is a big emitter of all three of these infamous GHGs. The livestock’s respiratory process results in direct emission of carbon dioxide into the atmosphere. Especially ruminants, but also to some extent monogastrics, emit methane in huge amounts through their digestive process.23 Because of this, ruminant production is the largest source of anthropogenic methane emissions.24 Animal manure is the source of a different range of gases, depending on the way it is produced25 and managed26, including methane, nitrous oxides, carbon dioxide and ammonia.27 The carbon balance in land use is also affected by livestock because of the latter’s need for pastures and/or crops for feed. Similar adverse effects are generated by deforestation, with the additional negative impact of reducing nature’s carbon sinks. Additionally, GHGs are produced by

18_{H. STEINFELD et al., n.8 above, p.xxi.} 19_Ibid.

20_Ibid. 21_{Ibid., p.82.} 22_{Ibid., p.82.} 23_{Ibid., p.83.}

24_{W.J. RIPPLE, P. SMITH, H. HABERL, S.A. MONTZKA, C. MCALPINE and D.H. BOUCHER, “Commentary:} ruminants, climate change and climate policy”, Nature Climate Change, 2013, Vol. 4, Issue 1, p.2

25_{Solid or liquid.}

26_{Collected, stored or spread.}

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the fossil fuels that are used during the production process of meat products, ranging ‘from feed production to processing and marketing of livestock products.’28

The direct emission of carbon dioxide by livestock constitutes only 9 percent of the global total of these emissions, with a minimal amount stemming from the livestock’s respiration process, and most originating from the burning of biomass (deforestation) to meet the demand for pasture or feed crops.29_{Less well-known is that global meat production accounts for some 37 percent of}

anthropogenic methane emissions and the sector emits 65 percent of anthropogenic nitrous oxide.30

Hence, if we transpose these numbers into CO2-equivalent, it becomes clear the meat we eat

contributes much more to climate change than the car we drive.31 In light of the above, this thesis will analyze the legal consequences of a unilateral tax on ruminant meat.

GHGs stemming from animal agriculture are significant and, as mentioned above, constitute up till 18 percent of the total amount of all GHGs. The most-known GHG is carbon dioxide, or CO2.A

carbon tax then exists in levying taxes on the amount of carbon a product contains, or how much CO2

was released during the production of that same product. However, CO2 is not the only GHG causing

our planet and its atmosphere trouble. These other, non- CO2, substances are currently good for about

a third of all CO2 equivalent.32 Thus, “only with large simultaneous reductions in CO₂_{and non-CO}₂

emissions will direct radiative forcing be reduced during this century.”33

When looking at the environmental impact of meat, one preliminary distinction is vital, namely that between ruminants and non-ruminants. Already mentioned above, ruminants are especially prominent in the emission of methane. Thus, a meat tax differs from a carbon tax in that a meat tax seeks to reduce both the carbon dioxide, nitrous oxide and especially the methane produced by the animals, whereas a carbon tax focuses solely on carbon dioxide emissions. The reason for choosing a meat tax over a carbon tax on meat is also supported by the shorter atmospheric lifespan of methane in comparison to that of CO2. This shorter lifespan entails that stabilization or reduction in

temperature is possibly faster than when focus lies only on reducing CO2.34

The next part will discuss a possible solution to the problematic contribution of animal agriculture to climate change. This solution takes the form of a state’s unilateral introduction of a meat tax.

28_Ibid.

29_{B.G. HENNING, n.16 above, p.73.} 30_{H. STEINFELD et al., n.8 above, p.xxi.} 31_{B.G. HENNING, n.16 above, p.74.} 32_{W.J. RIPPLE et al., n.23 above, p.2.} 33_Ibid.

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3 A possible solution: the unilateral introduction of a meat tax

3.1 Why a meat tax?

3.1.1 Why meat?

In principle, every food product could be the subject of a GHG emissions tax. The choice to focus on meat has several underlying reasons. The first (and most prominent reason for this thesis) is that a tax on meat holds within itself the possibility of being an effective measure of climate change mitigation because vegetable foods are much less GHG intensive than meat products.35 Further, meat alternatives emit only a small fraction of GHGs in comparison with meat products and the amount of alternative food products is numerous. Taking into account the nutritional requirements that meat alternatives would have to live up to, it becomes clear that a vast number of combinations of different food types is possible.36 Even when more restrictive criteria for substitutability are used, like the preference for meaty texture, still a substantial number of alternatives is available for meat from ruminants because different meat types are present on the meat market, as well as vegetable-based substitute products.37 For example, if beef is substituted with chicken or pork, the total amount of GHGs emitted would be reduced by 80 percent, and if beef is substituted by beans holding the same amount of protein, GHG emissions would be reduced by 99 percent.38_{Therefore this thesis will focus}

on ruminant meat.

3.1.2 Why a tax?

Why opt for a tax measure to induce climate change mitigation? Primarily, all policy makers have the choice between three categories of instruments, namely command-and-control39, information provision40 and price-based measures, like taxes.41 Overall majority of scholars opt for the price-based measures because information provision and command-and-control measures will not induce change fast enough, and more coercive measures are necessary.42 Within the category of price-based measures, policy makers have the choice between taxes on emissions as such, or taxes on the in- or outputs related to, while not completely correlated with, the emissions.43 Whereas taxes on direct

35_{C. BÄHR, “Greenhouse Gas Taxes on Meat Products: A Legal Perspective”, Transnational Environmental Law, 2015,} Vol. 4, Issue 1, p.156.

36_{S. WIRSENIUS, F. HEDENUS and K. MOHLIN, “Greenhouse Gas Taxes on Animal Food Products: Rationale, Tax} Scheme and Climate Mitigation Effects”, Climate Change, 2011, Vol. 108, Issue 1, p.163.

37_Ibid. 38_Ibid.

39_{For example, stipulated technology or performance standards. Ibid., p.161.} 40_{For example, public information campaigns. Ibid., p.161.}

41_{Ibid., p.161.}

42_{A. NORDGREN, “Ethical Issues in Mitigation of Climate Change: the Option of Reduced Meat Production and} Consumption”, Journal of Agricultural and Environmental Ethics, 2012, Vol. 5, Issue 4, p.567-578.

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emissions are generally preferred because they instantly deal with the discrepancy between private and social costs, sometimes they are less cost-effective than taxes on in- or outputs.44

Research pointed out that output taxes (or consumer taxes) are the optimal choice to deal with environmental externalities if three conditions are simultaneously met: 1) the monitoring costs of the emissions are high, 2) there is only a limited number of options to reduce emissions apart from output reduction, and 3) the number of possibilities of output substitution is big.45

Because the methane emissions from ruminants’ digestive process are related to what the animals are fed, but can also differ considerably between different individual animals, monitoring the exact methane emissions from ruminants’ digestive process would demand a regular measurement at the farm of a considerable number of animals. Due to a range of biophysical factors like soil, vegetation and climate that might be just as influential as human activities in generating land use emissions, it is difficult to measure and estimate what exactly the indirect effect of meat production on climate change is.46 This in combination with the necessity to monitor a large number of fields constantly and simultaneously in order to measure the nitrous oxide emissions,47 would result in immensely high costs to determine the methane and nitrous oxide emissions.48

In relation to the second criteria, the agricultural GHG emissions per unit of food ‘can be reduced by improvements in agricultural productivity and/or by dedicated technological or agronomic mitigation measures.’49 Whereas improvement in agricultural productivity is still a viable option in developing states, the mitigation potential of dedicated mitigation measures and their cost-effectiveness is in most cases low.50 Regarding the third criteria, it has been shown above (section 3.1.1) that the number of possible output substitutes for ruminant meat is big. Concordantly, it can be concluded that output taxes on ruminant meat fulfil the requirements set out above, and are the optimal choice to mitigate the environmental externalities of ruminant meat production.51

As a final remark to conclude on the effectiveness of imposing a meat tax, it must be stated that different tests on the global agricultural sector by the Food and Agriculture Organization of the United

44_{Ibid., p.161.} 45_{Ibid., p.161.}

46_{H. STEINFELD et al., n.8 above, p.83.}

47_{Because nitrous oxide emissions are correlated with the input of nitrogen fertilizer, but amount of the latter varies} greatly among different farms and different products. S. WIRSENIUS et al., n.35 above, p.162.

48_Ibid. 49_Ibid.

50_{This is mostly due to two reasons: first, most of the GHG emissions are linked to intrinsic aspects of the agricultural} system e.g. digestive system of ruminants cannot be drastically changed. Second, because most GHG emissions are characterized by a non-point source, the prospects for substantial emission cuts look poor. Ibid., p.163.

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Nations (‘FAO’) and the Organization for Economic Cooperation and Development (‘OECD’) have confirmed that introducing a meat tax would have the consequence of reduced consumption, and hence reduced GHG emissions.52

3.2 What kind of a meat tax?

Arguing why a meat tax should be inserted is the easy part. It is much harder determining the exact content of such a tax, especially because each different scenario has different legal implications. As explained above (section 3.1.2) an output tax is the ‘best man for the job’ when it comes to dealing with the environmental externalities of ruminant meat as opposed to a direct tax on emissions. Hence, this would be a kind of ‘Pigouvian tax’, which is a tax that is designed to internalize the cost of negative externalities.53 Whereas this tax is not designed with the purpose of reducing activity in relation to the product in question, regularly this is the effect of this tax because the consumer is the one burdened with the cost.54

Further, the tax would have to be levied on both domestic products and on imported products in order to level the playing field between domestically (taxed) meat products and imported (untaxed) ones. This can be achieved either by taxing imported goods the same way you tax your domestically produced goods, or by refunding taxes when the domestically produced goods are exported so they are not more expensive than the same (‘like’) products on the international market. Since we want a decrease in meat consumption, we opt for the first option to let everyone pay because:

“(…) trade measures at the border[:] to impose a similar cost on importers. This type of trade policy is also argued to be an incentive for other countries to reduce their greenhouse gas emissions, so that the environmental objectives of domestic legislation are achieved and at the same time the global nature of climate change is taken into account.”55

Lastly, there are three kinds of possible taxes:

a) taxing the average of GHG emissions per unit, per category of meat for all the producers on the entire market (=a differentiated tax),

b) a uniform tax that is based on the average of GHGs per unit for each category of meat (=non-differentiated tax, or ‘one size fits all’), or

c) the actual GHG emissions per unit of meat of individual producers.56

52_{C. BÄHR, n.34 above, p.157.}

53_{M.TORREZ, “Accounting for taste: trade law implications of taxing meat to fight climate change”, The Georgetown}

International Environmental Law Review, 2014, Vol. 27, Issue 61, p.67.

54_Ibid.

55_{UNEP & WTO, Trade and Climate Change: WTO-UNEP report, 2009, p.98.} 56_{C. BÄHR, n.34 above, p.155-156.}

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The latter kind of tax is cost-effectively unworkable (as explained above section 3.1.2). First choice goes to the first kind of tax, namely a differentiated (or GHG-weighted) tax. Reason for choosing a differentiated tax over a non-differentiated one, is not only because this was the tax proposed by Wirsenius et al. after researching what sort of meat tax would best serve the effect of climate change mitigation.57 Choice for a differentiated tax is based on the incentive to combat climate change. By opting for a differentiated tax, the desired effect is for consumers to eat less of the most polluting meat (in casu ruminant meat), as opposed to a non-differentiated tax that taxes all meat at the same level and goals for consumers to eat less meat in general (which might be incentivized by animal welfare).58_{Thus, the meat tax best designed to mitigate climate change would be a differentiated}

consumer tax,59 but as will be shown below such a meat tax might raise difficulties under international trade law. This might result in a state having to choose for the second-best option: a non-differentiated meat tax.

In what follows, this thesis will set out the international legal framework relevant for a unilateral meat tax. First, this thesis will discuss the regime of international climate change law and whether a unilateral meat tax would be in conformity with a state’s obligations to reduce GHGs under that regime. Secondly, this thesis will focus on international trade law as prescribed by the WTO-rules, and what requirements a meat tax would have to meet in order to legally stand under this regime.

57_{S. WIRSENIUS et al., n.35 above, p.159-184.} 58_{A. NORDGREN, n.41 above, p.567.}

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4 International Legal Framework of a Unilateral Meat Tax: Where

Environmental Law Crosses Trade Law

4.1 International Climate Change Law and The Legal Obligation to Reduce GHG Emissions

There is a rather limited body of law that directly deals with climate change. This body consists of three main parts: UNFCCC, the Kyoto Protocol and the Paris Agreement.60 Starting with the ‘birth’ of the climate change regime on international level, the UNFCCC, this thesis will then chronologically discuss the Kyoto Protocol thereto, and finally the latest international agreement on climate change: the Paris Agreement. A full analysis of each of these instruments is beyond the scope of this thesis. Therefore, the focus will lie solely on how the obligation to reduce GHG emissions is formulated in these respective documents.

4.1.1 UNFCCC

With its 197 parties, the UNFCCC has universal membership today.61_{The obligations for these}

parties arising from their membership, are not of a binding nature regarding the individual emission targets of states.62 Nonetheless, the UNFCCC does encompass obligations for states, as the objective of the convention is very clear:

“(…) stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.”63

In order to meet the goal set out above the UNFCCC uses, among others, the principle of common but differentiated responsibilities.64 By making use of three categories of states, the convention differentiates between certain obligations for each group. Article 4.1 of the UNFCCC lays down the general obligations that apply to all states. Article 4.1 (c) UNFCCC specifically mentions agriculture as one of the sectors in light of which all parties shall promote and cooperate to reduce or prevent the emission of anthropogenic GHGs. Sub (e) of the same article also specifically mentions agriculture as one of the sectors where all state parties must cooperate to adapt to the effects of climate change.

60_{Side note must be made to other fora where discussions on climate change have also been taking place, resulting in} instruments like the Montreal Protocol or the Gothenburg Protocol. Discussion thereof is beyond the scope of this thesis, and focus will thus lie on the UNFCCC system. P.M. DUPUY and J.E. VIÑUALES, n.13 above, p.145.

61 _United _Nations _Climate _Change, _Status _of _Ratification _of _the _Convention,

http://unfccc.int/essential_background/convention/status_of_ratification/items/2631.php , last visited 7 April 2018. 62_{J. C. DERNBACH and S. KAKADE, “Climate Change Law: An Introduction”, Energy Law Journal, 2008, Vol. 29,} Issue 1, p.9.

63_{Art. 1 UNFCCC.} 64_{Art. 4.1 UNFCCC.}

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In addition to these general obligations, the Annex I-states, or the states that were members of the OECD in 1992 and states with economies in transition, have to take a prominent role in the modification of long-term trends in emissions. They have to do this through the adoption of national policies and measures with an eye to reducing their GHG emissions by the year 2000 to the levels of 1990.65 The Annex II-states, or the states that were members of the OECD in 1992, have as additional obligation to provide for new and supplementary financial resources in order to cover the costs the developing states made while complying with their own obligations.66_{Economies in transition are}

given some flexibility in implementing their obligations,67_{the general obligations of non-Annex}

I-states are interpreted softer than for Annex I-I-states and the I-states not part of Annex I are possible recipients of financial support.68

Under this framework convention that allows for progressive realization of its objective,69 the imposition of a meat tax would be allowed in so far as it does not run counter to article 3.5 UNFCCC. This article prohibits measures that “constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade”.70 Because the wording of article 3.5 UNFCCC is similar to that of the chapeau requirement found in article XX of the General Agreement on Tariffs and Trade (‘GATT’), this thesis will discuss the precise meaning of these words under part 4.2.2 below.

Suffice it to say that the scope of article 3.5 UNFCCC cannot be broader than that of article XX GATT because the former article was included in the UNFCCC to make sure that measures taken by parties to the UNFCCC would be in conformity with the legal regime of the WTO.71 It would further be counterintuitive to include stricter free trade protection in an instrument designed to mitigate climate change (the UNFCCC), than in an instrument specifically designed to protect free trade (WTO-rules).72 Hence, if a unilateral meat tax is in conformity with article XX GATT, there is no reason to believe a separate issue would arise under article 3.5 UNFCCC.

4.1.2 Kyoto Protocol

Unlike the UNFCCC, the 1997 Kyoto Protocol does set binding limitations on GHG emissions.73 These limits are illustrative of developed countries’ higher burden in relation to reducing their GHG emissions. This is because they are the current main contributors of GHGs into the atmosphere as a

65_{Art. 4.2 UNFCCC.}

66_{Art. 4.3, 4.4 and 4.5 UNFCCC.} 67_{Art. 4.6 UNFCCC.}

68_{Art. 11 UNFCCC.}

69_{P.M. DUPUY and J.E. VIÑUALES, n.13 above, p.148.} 70_{Art. 3.5 UNFCCC.}

71_{C. BÄHR, n.34 above, p.161.} 72_Ibid.

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consequence of their 150 years of industrialisation.74 The Kyoto Protocol adds obligations for the Annex I-states, while affirming the general obligations for non-Annex I-states without adjusting them.75 The main, and most known, obligation for the Annex I-states is the global reduction of GHG emissions of at least 5 percent by 2008-2012 as compared to 1990.76

The Doha Amendment to the Kyoto Protocol sets out the continuance of the Kyoto Protocol but with some amendments to the latter. The eye catcher is the commitment of Annex I-states to reduce GHG emissions by 18 percent in the period of 2013 to 2020 in comparison with 1990 levels.77_{The Doha}

Amendment further entails a revised list of GHGs on which reporting is required, and several amendments to articles in order to update their wording to be in conformity with the specifications of the second commitment period.78 However, at the date of writing, the Doha Amendment has not yet entered into force as it needs at least 144 instruments of acceptance, and currently only as much as 111 have been laid down with the Depositary.79

The Kyoto Protocol indicates the sector of agriculture80_{and the gases emitted by the production of}

ruminant animals as a particular source of GHG emissions.81 More importantly, a meat tax would be in conformity with the Kyoto Protocol as the latter, in article 2.1(a)(v), calls for a “progressive reduction or phasing out of market imperfections” and specifically mentions, among others, taxes to see this through.

Further, as mentioned above, animal agriculture has a huge impact on land use, land-use change and forestry (‘LULUCF’). In light of this, a meat tax would be in conformity with article 3 paragraphs 3 and 4 of the Kyoto Protocol as these respectively concern the emission of GHGs stemming from “direct human-induced land-use change and forestry activities, limited to afforestation, reforestation and deforestation” and “human-induced activities related to changes in GHG emissions by sources and removals by sinks in the agricultural soils”.82 Thus, Annex I states are specifically urged to meet their obligation under the Kyoto Protocol by focusing on the sector of LULUCF. Reason for that is

74_{United Nations Climate Change, Kyoto Protocol,}_{http://unfccc.int/kyoto_protocol/items/2830.php}_{, last visited 8 April} 2018.

75_{N. HÖHNE, C. GALLEGUILLOS, K. BLOK, J. HARNISCH and D. PHYLIPSEN, “Evolution of commitments under} the UNFCCC: Involving newly industrialized economies and developing countries.”, Berlin, Federal Environmental Agency (Umweltbundesamt), 2003, p.4.

76_{Art.3.1 Kyoto Protocol.} 77_{Art. 1(C) Doha Amendment.}

78_{United Nations Climate Change, What is the Kyoto Protocol?,}

https://unfccc.int/process/the-kyoto-protocol/what-is-the-kyoto-protocol , last visited 10 April 2018.

79_{United Nations Climate Change, The Doha Amendment,}

https://unfccc.int/process/the-kyoto-protocol/the-doha-amendment , last visited 10 April 2018.

80_{Annex A Kyoto Protocol mentions five source categories: energy, industrial processes, solvent and other product use,} agriculture, and waste.

81_{Annex A Kyoto Protocol.} 82_{Art. 3.3 and 3.4 Kyoto Protocol.}

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that the LULUCF sector provides unique opportunities to reduce net GHG emissions, one of them being “reduction of emissions of non-CO2 gases (e.g., from agriculture)”.83 Concordantly, both the

form of the measure, namely a tax, and its subject, namely the agricultural sector in general and ruminant animal production in particular, are endorsed by the Kyoto Protocol. A unilateral meat tax would thus be in conformity with a state’s obligations under the Kyoto Protocol.

4.1.3 Paris Agreement

The 2015 Paris Agreement’s main goal is to make sure the rise of global temperature this century remains “well below”84 2 degrees Celsius in comparison to pre-industrial levels, with a further intention to limit the same increase in temperature to only 1,5 degrees Celsius, as “this would significantly reduce the risks and impacts of climate change”.85 This instrument has taken a different turn in the road in comparison to the Kyoto Protocol, because unlike the latter, the Paris Agreement does not put forward the principle of common but differentiated responsibilities as such. It rather takes a bottom-up approach, where each of the state parties determines its own national contributions which it sets out to achieve.86 Concordantly, “parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions”.87

A unilateral meat tax under the Paris Agreement would thus be an embodiment of such a domestic mitigation measure. Further, such a tax would also fulfill the objectives of article 2.1 (b) of the Paris Agreement. This article prescribes that adaptability and resilience measures as well as development that is low in GHG emissions should not threaten food production. Because a unilateral meat tax would have the effect of reduced meat consumption,88 more land would become available to grow alternative products for human consumption and hence a meat tax would not only “not threaten food production”89 but actually endorse more food security. In this regard, most is to be gained from the sector of ruminant meat production, which is by far the most land intensive kind of animal food production we know.90

Thus, the intermediary conclusion is that a unilateral meat tax would be in conformity with all three instruments above dealing with the reduction of anthropogenic GHGs. Next, the possibility of introducing a unilateral meat tax under the regime of international trade law will be discussed.

83_{B. SCHLAMADINGER et al., “A Synopsis of Land Use, Land-Use Change and Forestry (LULUCF) under the Kyoto} Protocol and Marrakech Accords”, Environmental Science & Policy, 2007, Vol. 10, p.273.

84_{Art. 2.1 (a) Paris Agreement.} 85_Ibid.

86_{A. HUGGINS and MD S. KARIM, “Shifting Traction: Differential Treatment and Substantive and Procedural Regard} in the International Climate Change Regime”, Transnational Environmental Law, 2016, Vol. 5, Issue 2, p.428.

87_{Art. 4.2 Paris Agreement.} 88_{M.TORREZ, n.52 above, p.67.} 89_{Art. 2.1 (b) Paris Agreement.}

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4.2 International Trade Law and The Legal Obligation of Free Trade

In determining the admissibility of a meat tax under the GATT, this thesis takes a two-tier approach. First, it will be discussed whether a meat tax can be imposed under the general rules of free trade. This means the meat tax is not seen as a restriction on free trade as such. In order for a unilateral trade measure, like a meat tax, to be allowed under the rules of the GATT it must be suited for border tax adjustment, and not go against the principles of ‘national treatment’ and ‘most-favored nation’.91 In second order, this thesis will discuss the option where a meat tax is seen as a restriction on free trade, but might nonetheless be allowed because it falls under one of the exceptions of article XX of GATT.

In light of the foregoing, the WTO dispute settlement mechanism plays a very important role. Its function consists in making international trade more predictable and secure.92 This objective is secured through decision-making in the form of reports by quasi-judicial bodies (Panels or Appellate Bodies).93 These reports are later on confirmed by the political organ of the WTO, namely the Dispute Settlement Body.94 Only when reports are adopted by the Dispute Settlement Body, they become binding.95

4.2.1 WTO law: free trade under the GATT To BTA, or not to BTA?

Under article II of GATT, the general rule is that no other customs than those included in the agreed upon schedule of tariffs, can be applied at the border on imported goods.96 There are only three exceptions to that rule, namely Border Tax Adjustments (‘BTA’) ,97 anti-dumping duties98 and fees that represent the cost of services rendered.99 Hence, in order for a meat tax to be in accordance with the WTO-rules, it must fall under the first exception and be qualified as a BTA. A BTA can take two forms, namely a BTA on imports and a BTA on exports. The first entails the levying of a tax on imported goods whereby the border tax is similar to a domestic tax on ‘like’ products, whereas the second type uses refunds of domestic taxes when the goods are exported.100 The meat tax analyzed in this thesis takes the form of a BTA on imports.101

91_{C. BÄHR, n.34 above, p.163.}

92_{WTO (ed.), A Handbook on the WTO Dispute Settlement System, Cambridge, Cambridge University Press, 2017, p.5.} 93_Ibid.

94_{Political because this organ is composed of governmental representatives of all WTO members. Ibid., p.23.} 95_{Ibid., p.23.}

96_{Art. II.1 GATT.} 97_{Art. II.2 (a) GATT.} 98_{Art. II.2 (b) GATT.} 99_{Art. II.2 (c) GATT.}

100_{L. TAMIOTTI, “The Legal Interface Between Carbon Border Measures and Trade Rules”, Climate Policy, 2011, Vol.} 11, Issue 5, p.1204.

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In order for a meat tax to be qualified as a BTA under article II.2(a) of GATT, “the charge imposed on the imported product needs to be equivalent to the tax imposed on the ‘like’ domestic product”,102 hence a border tax adjustment is allowed whereas a border tax (or customs duty) is not.103 For a meat tax to qualify as a permissible BTA under GATT it must further be an indirect tax. The latter is a tax levied on the product, whereas a direct tax is levied on the producer. It was indicated by a GATT working party on BTA’s during the seventies that only indirect taxes on products would be eligible for adjustment, whereas direct taxes on producers would normally not be.104_{This was later on}

confirmed by a GATT Panel in United States Tax Legislation (DISC).105

However, the critical part exists in determining whether a meat tax (read GHG emissions tax) is a direct or indirect tax. In a report that was co-written by the United Nations Environment Programme and the WTO, it was pointed out that the WTO-rules would allow for BTA in certain circumstances. These circumstances take the form of two articles’ standards that have to be met, namely article II.2(a) GATT and article III.2 GATT.

Article III.2 GATT only allows BTA’s on imports when taxes are “applied, directly or indirectly, to like domestic products”, hence only indirect taxes. Concordantly, the key question is whether GHG taxes are direct (i.e. on the producer) or indirect (i.e. on the products) taxes. Under article II.2(a) GATT, a BTA is allowed on imported products that are ‘like’ domestic products, or on articles from which the imported products have been manufactured or produced (in whole or in part). Because a meat tax would tax the amount of GHGs that were emitted during the production of the meat, this tax would fall under the second category.106 However, it is heavily debated whether only products where the inputs (or articles) are still physically present or incorporated into the end product can fall under this category, or whether also ‘external inputs’ that are not present in any form in the end product, like the emission of GHGs, can fall under this article.107 These processes and production methods of products (‘PPMs’) are respectively referred to as product related and non-product related PPMs.

According to the two requirements above, a meat tax would have to qualify as a tax on the product, or in this case the articles from which the product has been made. Because a meat tax is levied on the amount of GHGs emitted during the production of the meat, the main question concordantly becomes

102_{L. TAMIOTTI, n.98 above, p.1204.} 103_Ibid.

104_{JP. TRACHTMAN, “WTO law constraints on border tax adjustment and tax credit mechanisms to reduce the} competitive effects of carbon taxes”, National Tax Journal, 2017, Vol. 72, Issue 2, p.478.

105_{L. TAMIOTTI, n.98 above, p.1204.} 106_{UNEP & WTO, n.54 above, p.104.}

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whether the PPMs are part of the “articles from which the imported product has been manufactured or produced”.108

Up until today, no case law specifically dealing with carbon taxes and the question of PPMs has come before the WTO Panels yet. However, the first case closest thereto is the US-Superfund case. In this case, a US scheme taxed the chemicals used in the production of the imported product. Because the amount of the tax was comparable to the amount that would be taxed if the products had been produced domestically, the GATT Panel decided the US was allowed to levy a tax on the chemicals used in the production of the end good.109_{Sometime later, a similar case emerged where the US}

implemented an Ozone Depleting Chemicals (ODC) tax. Similar to US-Superfund, this case too concerned process-related BTA’s whereby the substances used to create an end product were taxed rather than the end products themselves. Again, this kind of taxation was deemed in accordance with the WTO-rules.110 However, in neither of the above two cases, nor in any other, has the Panel addressed the question whether PPMs that are not/no longer present in the end product would be permissible under the same reasoning. Hence, whereas product related PPMs have been accepted under the WTO, remains an open question whether the same holds true for non-product related PPMs.

On the one hand, the majority of scholars argue that the wording ‘directly or indirectly’ of article III.2 GATT allows for the taxation of “[inputs] or process-related prior-stage taxes on physical inputs such as energy”.111 In this line of reasoning, the fuel or energy used as input, or the GHGs emitted during the production, can be seen as indirectly applied to the end product, notwithstanding that in neither case the input nor GHGs are incorporated in the end product.112 According to Pauwelyn, PPMs should be able to be adjusted at the border if the nexus between what is taxed (GHG emissions) and the product itself (meat) is tight enough.113_{In addition, it has been argued that non-product related PPMs}

“are a response to humankind’s shared habitation on the planet.”114 This makes PPMs necessary to address transnational problems in an indirect way, when the direct way of multilateral cooperation is not available or not working.115

108_{Art. II.2 (a) GATT.}

109_{M.TORREZ, n.52 above, p.74.}

110_{F. BIERMANN and R. BROHM, “Implementing the Kyoto Protocol without the USA: the strategic role of energy tax} adjustments at the border”, Climate Policy, 2004, Vol. 4, Issue 3, p.294.

111_{F. BIERMANN and R. BROHM, “Border adjustments on energy taxes: a possible tool for European policy makers in} implementing the Kyoto Protocol?”, Vierteljahrshefte zur Wirtschaftsforschung, 2005, Vol. 74, Issue 2, p.252.

112_{L. TAMIOTTI, n.98 above, p.1205.}

113_{J. PAUWELYN, “Carbon leakage measures and border tax adjustments under WTO law” in G. VAN CALSTER and} D. PRÉVOST (eds.), Research Handbook on Environment, Health and the WTO, Edward Elgar, Cheltenham, 2013, p.497-480.

114_{S. CHARNOVITZ, “The Law of Environmental PPM’s in the WTO: Debunking the Myth of Illegality”, Yale Journal}

of International Law, 2002, Vol. 27, Issue 1, p.70.

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However, on the other hand a minority of authors argues that the wording of article II.2(a) GATT is restrictive in that it only allows for inputs that are actually incorporated in, or are part of the end product. Hence, differentiation based purely on how a product is made is not an option.116_Therefore,

much will depend on how narrow the WTO bodies will interpret article II.2(a) GATT.

National Treatment & Most Favored Nation-principle (‘MFN’)

Article I of GATT requires state parties of the WTO to give all imported goods from WTO member states the same benefits as are given to like products from any other country.117 Article III of GATT encompasses the principle of national treatment, which basically requires that foreign products, once they have been imported, must be treated at least as favorable as ‘like’ domestic products.118

Important to keep in mind is, firstly, that both principles require that no differentiated taxation which is detrimental for imported products (respectively vis-à-vis like products from other countries, or like domestic products) is imposed, no matter what the rationale or intent behind the measure is.119 Secondly, national treatment or MFN do not only cover de jure non-discriminatory measures, but also cover measures that are de facto discriminatory. This means that taxations schemes that look origin-neutral, but that place heavier taxation on different parts from which the product is made, and concordantly negatively impact the imported products vis-à-vis like domestic products or like products from other countries, are also in violation of the national treatment principle.120

In light of a meat tax that would be uniformly calculated on the basis of an average of GHG emissions per unit of meat, or a non-differentiated meat tax, no distinction or discrimination would arise between domestic and imported meat, or between different kinds of imported meat.121 Hence, this kind of tax would be in conformity with the national treatment-principle and MFN.

For meat taxes stooled on a market-based average of GHGs of a certain meat product, whereby the tax is higher for certain imported products than for domestic ones or than for other imported ones, a more extensive investigation is necessary to determine whether they are in conformity with the two principles under consideration.122 When this meat tax turns out to be higher for imported meat products that come from GHG-intensive markets (like ruminant meat from the Amazon) than for meat products that are low(er) in GHG emissions (domestic or imported), a problem might arise under WTO law if these products are considered ‘like’ products. Hence, key to both the national treatment

116_{M. GRUBB, “Tackling carbon leakage, sector-specific solutions for a world of unequal prices”, Report, Carbon Trust,} 2010, p.40, retrieved online at: http://discovery.ucl.ac.uk/1471273/1/Grubb_R12.pdf , last visited 25 April 2018. 117_{Art. I.1 GATT.}

118_{H. HORN, “National Treatment in the GATT”, American Economic Review, 2006, Vol. 96, Issue 1, p.394.} 119_{Ibid., p.397.}

120_Ibid.

121_{C. BÄHR, n.34 above, p.165.} 122_Ibid.

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and MFN principle, is to define the ‘like’ product,123 and secondly, whether there is a differentiation present between these ‘like’ products. In case the taxes mentioned above are higher for imported products, a differentiation is present. Thus, the question arises: is GHG-intensive meat ‘like’ meat that is produced with much less GHG emissions, or put plainly can you make a distinction between two steaks based on the way they were produced?

To determine whether or not products are ‘like’ products, a look into the WTO’s case law is necessary. WTO Panels have taken into account a number of different factors, whereby four come predominantly to the forefront. These include: 1) the physical properties of the products, 2) the end use of the products in a given market, 3) international classification of the products for tariff purposes, and 4) consumers’ tastes and habits.124 In dealing with the subject of a meat tax, motivated by the fight against climate change, especially the last criteria can be of significant importance.

Again, as discussed above, this boils down to whether or not PPMs can be a decisive factor as to whether or not products are ‘like’ even though the amount of GHGs emitted during the production of the meat are no longer detectable in the end product. In light of the criteria of consumer preference and PPMs, two cases are of particular importance in determining whether GHG-intensive meat can be deemed ‘unlike’ its environmentally friendlier counterpart.

In EC-asbestos, the Panel gave due weight to consumer preferences by deciding that asbestos containing products were not ‘like’ products containing a substitute ingredient.125 Of course, a profound counterargument on the impact of this case might be that consumers are not automatically as concerned about the environment as they are for their personal health.126 In Automobile Taxes the Panel found that gas guzzlers were not ‘like’ high-fuel efficient cars. Hence, the different fuel economy was determinant in deciding on the likeness of the product.127 However, in the Tuna/Dolphin cases I and II, the Panel decided US measures that banned tuna that was caught without special nets that reduced dolphin by-catch, were in violation of the US’s trade obligations under the GATT.128_{Underlying reason for that conclusion was that the product, tuna, was identical in both}

cases and that PPMs not affecting the product as such (the nets) could not differentiate between otherwise identical products.129

123_{P. MORRISON and L. NIELSEN, “Trade, environment and animal welfare: conditioning trade in goods and services} on conduct in another country?” in G. VAN CALSTER and D. PRÉVOST (eds.), Research Handbook on Environment, Health and the WTO, Edward Elgar, Cheltenham, 2013, p.215.

124_{M.TORREZ, n.52 above, p.78.}

125_{C. KAUFMANN, “Carbon-Related Border Tax Adjustments: Mitigating Climate Change or Restricting International} Trade?”, World Trade Review, 2014, Vol. 10, Issue 4, p.507.

126_{M.TORREZ, n.52 above, p.79.} 127_{Ibid., p.78.}

128_{Ibid., p.80.}

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While the line of thinking in the latter cases might seem like the coup de grace for a meat tax based on GHG emissions that neither affect the products as such, this might not be completely so for a number of reasons: one, the Tuna Dolphin cases were never adopted by the Dispute Settlement Body,130 two, this reasoning of the Panel was highly criticized for severely limiting the possibility for nations to adopt certain environmental measures, and three, the WTO thinking on the issue of BTA’s has evolved over time.131_{The latter is illustrated by the Shrimp Turtle cases I and II, in which the}

Panel did not object against the use of PPMs to differentiate between products.132

Thus, on the one hand these rulings above might entail that consumer preferences can strengthen the claim that GHG emissions can influence the ‘likeness’ of products. On the other hand, these ruling cannot be interpreted too widely. Because up until today no ruling has been given that explains the criterion of ‘consumer preferences’ in detail, it is not yet clear enough to what extent this has opened the door for environmental measures to decide on the likeness of products.133

To conclude, a non-differentiated tax on meat would not form problems under the national treatment or MFN principles. Concordantly, this kind of BTA would raise no particular issues under the WTO-rules. Instead, a differentiated, GHG-weighted, tax would pose no difficulties if products were distinguished based on their PPMs. This would mean products are ‘unlike’ and can be treated differently. However, a differentiated tax would not fit the requirements above (national treatment and/or MFN principle) if imported products are deemed ‘like’ products vis-à-vis domestic products or vis-à-vis other imported products. In that case the tax would be deemed a limitation on free trade, which can be legitimate only if it qualifies as one of the exception clauses under article XX GATT. This will be discussed below.

4.2.2 Exceptions: article XX GATT

A look at the text of article XX GATT reveals that environmental policies, like the meat tax under consideration, can be justified under three possible exception clauses, namely (a), (b) and (g):

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

(a) necessary to protect public morals;

(b) necessary to protect human, animal or plant life or health;

130_{This entails the decision did not become binding (see section 4.2).} 131_{J. PAUWELYN, n.111 above, p.483.}

132_{M.TORREZ, n.52 above, p.80.} 133_{C. KAUFMANN, n.123 above, p.508.}

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…

(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;134

In order to fulfill the requirements of the article above, a measure has to withstand a two-step analysis. First, whether it falls under one of the subparagraphs of article XX GATT, and second, whether it is in conformity with the introductory clause, or commonly named ‘the chapeau’.135 Because a trade measure based on PPMs, like a differentiated meat tax based on GHG emissions, risks violating the substantive provisions of national treatment and MFN, it would have to fulfill the two-step test of article XX GATT in order to nonetheless be a justified measure under international trade law.136 Environmental exception measures usually fall under subparagraphs (b) or (g), and initially especially under (g) because ‘relating to’ was more easily fulfilled than the required nexus of ‘necessary to’ that is present in (b).137 Therefore this thesis will start with subparagraph (g) and then (b). Unlike most scholars, who only analyze (b) and (g), this thesis would also like to explore the possibility of invoking subparagraph (a) to justify a meat tax under international trade law.

The Subparagraphs

In order for the meat tax under consideration to fall under subparagraph (g), three conditions must be simultaneously fulfilled: a) The planet must be qualified as an ‘exhaustible natural resource’, b) the measure must ‘relate to’ the conservation of the planet’s atmosphere, and c) the measure must be ‘made effective in conjunction with restrictions on domestic production or consumption’.138 Concerning the first condition, it would be surprising if the WTO would decide against the planet’s atmosphere being an exhaustible resource, because it has already accepted clean air to be an exhaustible resource in US Gasoline.139 The second condition requires that the national measure is ‘related to’ the conservation of, in casu, the planet’s atmosphere and climate. This entails a substantial relationship that is both close and genuine, and sufficiently precise,140 and where basically the ‘means’ of the measure is reasonably related to the ‘ends’.141 A measure like the meat tax under consideration should normally pass this ‘related to’ test (see section 3.1). Lastly, the third condition will be met when the measure in question lays down generally the same restrictions for domestic and imported products. According to the Appellate Body in US Gasoline this is not a strict test but more a requirement of even-handedness. Hence, even if the measure in question would discriminate against

134_{Art. XX GATT.}

135_{S. LESTER, B. MERCURIO and A. DAVIES, World Trade Law: Text, Materials and Commentary, Oxford, Hart} Publishing, 2012, 2nd edition, p.367.

136_{P. MORRISON and L. NIELSEN, n.121 above, p.215.} 137_Ibid.

138_{J. PAUWELYN, n.111 above, p.497-500.} 139_{M.TORREZ, n.52 above, p.83.}

140_{J. PAUWELYN, n.111 above, p.499.}

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imported products in detail (in casu the tax percentage for ruminant meat from GHG-intensive origins like the Amazon), the measure in its entirety can still pass the test, as was the case in US Gasoline.142 Because a differentiated meat tax has an objective standard (tax based on the average amount of GHGs per unit per category of meat per market) this measure would very likely meet the standard of this third requirement. To conclude, a unilateral differentiated meat tax would fit the requirements to fall under subparagraph (g) or article XX GATT.

Falling under subparagraph (b) at first sight seems to contain a higher threshold by demanding a ‘necessary’ nexus between the measure and the protection of ‘human, animal or plant life or health’.143 However, the case Korea-Beef has made clear ‘necessary’ does not require the highest standard where the measure is deemed ‘indispensable’. Instead, measures can be qualified as necessary even when alternative measures exist and/or if the measure in question is not completely indispensable to reach the relevant objectives.144 The latter was illustrated by the outcome of the Brazil-Retreated Tyres case, which is of particular importance for the meat tax under consideration because the Appellate Body decided that subparagraph (b), despite its seemingly strict wording, could be invoked to justify measures concerned with the protection of the environment in general.145 This is the case even though it may be hard to prove the isolated contribution of the measure to public health or the environment when that measure is part of a more extensive policy.146 This means the result is a process of weighing and balancing to determine the ‘necessity’ of a given measure.

Concordantly, this process could potentially work in favor of a differentiated tax on GHG emissions because of the importance of addressing climate change on the one hand, the very small implications of a BTA on trade on the other,147 and because no ‘reasonable alternative’ measure is available.148 Further, in US-Gasoline the Panel decided a policy measure set out to reduce air pollution coming from gasoline consumption was indeed a form of protecting human, animal and plant life or health because air pollution presents a health risk, and about half of such pollution is caused by vehicle emissions, which the US measure reduced.149_{Hence, from the above it can be reasonably inferred}

that a differentiated meat tax could fall under subparagraph (b).

142_{J. PAUWELYN, n.111 above, p.500.} 143_{Art. XX (b) GATT.}

144_{S. LESTER, B. MERCURIO and A. DAVIES, n.133 above, p.369.}

145_{C. KAUFMANN, “Carbon-Related Border Tax Adjustments: Mitigating Climate Change or Restricting International} Trade?”, World Trade Review, 2014, Vol. 10, Issue 4, p.513.

146_{M.TORREZ, n.52 above, p.83.} 147_{Ibid., p.82.}

148_{Because research pointed out a tax measure would have the best effect to mitigate climate change. See section 3.1.} 149_{S. LESTER, B. MERCURIO and A. DAVIES, n.133 above, p.380.}

"The perfect is the enemy of the good.": the unilateral imposition of a meat tax : a legal analysis through international trade and environmental law