ABSTRACT
This chapter provides a short overview of the various issues created by the interface between trade, investment and environmental regulation. It focuses on the links between trade and environmental protection, though investment aspects will also be dealt with when relevant. Direct restrictions on trade generally take the form of import or export bans. Such restrictions are contrary to Article XI of the General Agreement on Tariffs and Trade (GATT) which prevents quantitative restrictions on trade. As such, process standards do not restrict trade and there is nothing in the GATT that prevents its members from regulating domestic producers that engage in polluting activities. The use of unilateral trade restrictions to coerce foreign countries to modify their domestic regulations has been rejected by GATT dispute settlement panels. Domestic measures adopted to implement these trade provisions may, however, conflict with GATT in a number of ways.
