Introduction

During the summer of 2006, Argentina sued[1] Uruguay in the International Court of Justice for breach of the 1975 Rio Uruguay Treaty.[2]  This treaty regulates both countries' use of the River Uruguay, which runs along their mutual border and creates The River Uruguay Executive Commission (“Commission”).[3]  The Commission's role as a conduit for notification and a forum for discussions relating to any projects undertaken along the banks of the River Uruguay.[4]  To this end, the Commission sets out a list of procedures each country must follow.[5]  Uruguay approved the building of two paper mills (also known as pulp mills) on the banks of the River Uruguay by two foreign companies: ENCE and Botnia.[6]  Argentina opposed the construction of these pulp mills arguing that they would endanger the flora, fauna, and inhabitants of the River Uruguay shores.[7]  After talks between the countries fell through, Argentina, pursuant to the treaty's dispute settlement clause, sued Uruguay in the International Court of Justice asking for an injunction against Uruguay that would halt construction of the paper mills.[8]  Argentina argued Uruguay failed to comply with the procedural notification and consultation requirements set out by the Commission.[9]  Uruguay's defenses emphasized actual compliance with both the treaty's substantive and procedural law.[10]  Nonetheless, Argentina's environmentalist supporters (most notably the Center for Human Rights and the Environment) made vociferous arguments that this was just another example of a developed country's businesses (in this case, Finland, Belgium, France and Spain) exploiting weaker environmental regulations in developing[11] countries.[12]

Argentinean attorneys and the Center for Human Rights and the Environment's dedication to this argument was so strong, they wholly ignored the fact that Uruguay had imposed a multi–step permitting system.[13]  Moreover, Uruguay even required compliance with the high standards promulgated by the European Commission on Integrated Pollution Prevention and Control's Best Available Techniques.[14]  The International Court of Justice declined to grant Argentina's request for injunctive relief, finding a lack of imminent threat to the environment.[15]  The court, however, left the door open for Argentina to reurge its request if and when the risk to its environment became imminent.[16]

This anecdotal event encapsulates the realities and the false assumptions regarding international environmental law, developing countries, and international businesses.  The reality is that developing countries can function in the market while pursuing environmentally protective domestic policies.[17]  False assumptions (such as, the environment and business development are necessarily at odds, developing countries are not able to negotiate their way to a clean, developed status, and developed countries or their businesses invariably take advantage of this weakness) are often accepted without question.[18]

This comment takes a three–pronged approach in assessing the ability of developing countries to not only protect their environments, but to do so while remaining or becoming active members of the international business community.  First, this Comment summarizes the scholarship in favor of, and debunking the myth that, environmental regulations and economic prosperity are at odds.  This sheds light on false assumptions and also on the general philosophies existing in the field of environmental law.

Second, this Comment looks at the legal frameworks for enforcement of international environmental law in the context of trade competitiveness.  Beginning in the early 1970's with the Stockholm Convention, this part traces international environmental conventions through 2002.  However, this part only analyzes two particular frameworks styles in depth: NAFTA/CAFTA[19] and WTO/GATT.[20]  These international agreements between developing and developed countries provide an appropriate setting to look at the effect of developed countries' wishes on developing countries' environmental protections.[21]

Third, this Comment looks at the enforcement mechanisms available to and used by members of these various frameworks as well as their efficacy in tackling environmental disputes.  Enforcement mechanisms include disputes and settlement negotiations for NAFTA/CAFTA, dispute settlement panels for the WTO/GATT,[22] and the International Court of Justice.  Each enforcement mechanism is looked at through the prism of three particular cases: Harken v. Costa Rica (CAFTA/NAFTA), United States–Restrictions on Imports of Tuna[23] (WTO), and Pulp Mills on the River Uruguay (Arg. v. Uru.) (International Court of Justice).

Overall, this Comment attempts to paint a more nuanced picture of the interaction between international environmental law and the spread of industry to developing countries.  Many scholars start from the premise that the environment and business are necessarily at odds.  However, this is a simplistic view; a black and white picture that leaves no space for a common ground that may well exist.  Furthermore, wholesale adoption of the zero–sum relationship between developing countries' prosperity and their environmental health masks the various actors and agendas intertwined in the debate.  Of these parties, this Comment discusses Non–Governmental Organizations, environmentalists, governments, populations, and businesses.  An overview of some of the various legal frameworks and enforcement mechanisms in the field allows for a better understanding of the situation in all its shades of grey.

I.  The “System.”

Both the frameworks and the enforcement mechanisms for international environmental law create “the System” for the purposes of this Comment.  The System should provide some insights into the dynamics behind environmental regulation and industrial development.  An overview of the System provides a better of understanding as to how level the playing field really is.

International law is an intricate web of codified and uncodified laws resulting from countries' behaviors, court decisions, treaties, and statements issued by a variety of international organizations.[24]  Despite diversity in international law as a whole, bi– and multi–lateral treaties generally regulate environmental law.  The sheer number of international environmental agreements currently in existence makes a comprehensive review impracticable.[25]  Therefore, this Comment only examines three treaties (or groups of treaties):  WTO/GATT, NAFTA/CAFTA, and the Rio Uruguay Treaty of 1975 (an international agreement between Argentina and Uruguay, self–subjected to I.C.J. jurisdiction).[26]  These treaties are particularly relevant when compared to other international frameworks[27] because they involve interactions between developing and developed countries.

The next step in this Comment is to review treaty enforcement mechanisms to discern whether environmental regulations in developing countries are thwarted when faced with the business interests of developed countries.

A variety of international adjudicatory bodies enforce various elements of international law.  These include the WTO/GATT dispute settlement panels,[28] the European Court of Justice,[29] the International Court of Justice,[30] World Trade Organization ICSID arbitrations,[31] and national courts where NAFTA/CAFTA disputes are settled.[32]

This Comment concentrates on three forums for enforcement: the WTO/GATT dispute resolution panels, the International Court of Justice and national courts in which NAFTA/CAFTA provisions are litigated.

A.  In Theory: The Frameworks.

International law is composed of treaties, general principles of law, and customary international law that results from general and consistent practice by states and is typically followed due to a state's “sense of legal obligation.”[33]  Understanding where developing countries will find the legitimacy to defend their environments without an overview of the broader context of international law and how it interacts with environmental law is difficult.  Interestingly, environmental law is a striking category of “hard law”[34] since it is very nearly entirely based on actual agreements between countries and domestic statutory law.[35]

1.  Background Treaties

The main body of international environmental law comes from multilateral agreements.[36]  Several seminal environmental treaties serve as a strong interpretative and normative framework for environmental disputes that arise today.[37]  As a result, environmental law has gained significant recognition internationally.  As such, environmental law has necessarily had an impact on the drafting of multi–lateral trade agreements.  This effect, however, seems to be very slight.  As shown below, there is great disparity in the extent to which trade agreements take environmental impact into consideration (NAFTA/CAFTA are at one end of the spectrum and the Rio Uruguay Treaty are at the other).[38]

2.  NAFTA/CAFTA

The North Atlantic Free Trade Agreement (“NAFTA”) is a multilateral treaty creating a free trade zone between Canada, Mexico and the United States.[39]  The Central American Free Trade Agreement (“CAFTA”) creates a similar free trade zone between the United States, Honduras, Nicaragua, El Salvador, Guatemala, and the Dominican Republic.[40]  NAFTA and CAFTA have received significant criticism over the years.[41] One particular provision contained in both NAFTA and CAFTA has received significant attention because of its implications on environmental regulation: NAFTA's Chapter 11 and CAFTA's Chapter 10 provisions.  In fact, “[m]any environmentalists and other public interest advocates worry that use of [NAFTA's] Chapter 11 will broaden and ultimately discourage the governments of the United States, Canada, and Mexico from implementing environmentally protective regulations.”[42]  Obviously, these concerns are of particular importance in assessing NAFTA's effect on a developing country's ability to protect its environments while pursuing trade opportunities.

Chapter 11 of NAFTA “grants investors the right to privately enforce the rights granted under NAFTA.”[43]  For example, “private investors [may] sue the government [of a developing country] for compensation for any action that affects the value of an investor's property.”[44]  An investor may challenge a member–country's refusal to grant an operating permit (for example, to drill for oil), arguing that the application of permitting laws is arbitrary and contrary to the principle of a free trade zone.[45]

Much of the criticism surrounding the similar provisions embodied in NAFTA's Chapter 11 and CAFTA Chapter 10 is that the provisions allow private investors to strong–arm governments into allowing environmentally deleterious industries to be built within their borders, by scaring countries into acquiescence through the threat of large claims.[46]  In the name of free trade, companies demand exemptions from the environmental laws of countries with which they want to do business.[47]

CAFTA's Chapter 10 is strikingly similar to NAFTA's Chapter 11.[48]  Scholars argue that this makes it close to impossible for a developing nation to defend itself from CAFTA/NAFTA–type lawsuits.[49]

However, scholars' concerns about developing countries are generally misleading.  Despite the ominous assessment of CAFTA/NAFTA and its ability to overwhelm developing countries through lawsuits, scholars fail to address two important aspects of cases filed thus far.  First, investors have filed NAFTA Chapter 11 cases against all three NAFTA members: the United States, Canada and Mexico.[50]  As of 2005, fourteen out of forty–two cases were still in active arbitration.[51]  Of the fourteen, only five were against Mexico, the sole developing country party to NAFTA.[52]  Eight were against the United States, and one against Canada.[53]

Second, although the claims for all forty–two cases amounted to $48 billion, of the remaining twenty–eight cases (excluding the fourteen still in arbitration) only five cases came to an investor–friendly conclusion.[54]  This resulted in $35 million in collective awards as of 2005.[55]  Six more cases were dismissed, resulting in judgments favoring NAFTA governments.[56]

This reveals several things regarding NAFTA Chapter 11 provisions.  Although the provisions may be unduly beneficial to foreign investors, this shortcoming is applicable to all NAFTA member countries (as can be seen by the abovementioned distribution of cases).  Chapter 11 NAFTA claims are a particularly good tool for evaluating alleged anti–environmental effects of free trade agreements on developing countries because two members are developed countries and one is a developing country.[57]  Given the considerably equal distribution of claims against both the developed nations, Canada and the United States, and the developing nation, Mexico, there seems to be little strength in the argument that NAFTA Chapter 11 is particularly detrimental to developing countries' environmental laws.

3.  WTO/GATT

In an attempt to stymie any future armed conflicts, the General Agreement on Tariffs and Trade (GATT)[58] was created in 1947 as a mechanism to liberalize international trade and to increase international interdependence.[59]  The agreement reduced tariffs and trade barriers between its various members.[60]  In 1994 the GATT members, also referred to as Contracting Parties, created the World Trade Organization.[61]  The WTO currently has one–hundred and fifty members.[62]  The WTO's goal is the continued implementation of GATT principles as they have been amended over the years.[63]  Scholars and environmentalists alike perceive the WTO/GATT as an international vehicle for the perpetration of wrongdoing by developed nations against developing countries.[64]  As such, the GATT agreement and the WTO organization will be referred to jointly as WTO/GATT.

In the realm of environmental protection, scholars accuse the WTO of being a forum where a few rich countries dominate the debate,[65] discouraging developing countries' engagement in the decision–making process,[66] and creating barriers to developing countries' environmental protection through WTO dispute settlement panel decisions.[67]  These three flaws supposedly coalesce to make it extremely difficult for WTO developing country members to protect themselves within the GATT free trade framework.[68]

However, the WTO itself allows for derogations to GATT provisions for the “protection of human health and the environment.”[69]  The possibility for derogation is a clear indication of environmental law's influence on international trade.  The provisions allowing for derogation from purely free trade rules are called the Sanitary and Phyto–sanitary Preservation Provisions (“SPS”).[70]  However, these SPS measures are seen as providing minimal relief because WTO panels and appellate bodies narrowly construe them.[71]

The WTO/GATT exception for environmental concerns is a very narrow one, and critics argue that the dispute settlement panels and appellate panels of the WTO construe it even more narrowly.[72]  Critics further contend that the fundamental problem results from the enforcement mechanism of WTO panels.

Among the shortcomings disparaged, critics argue, “[e]nvironmental regulations . . . may be viewed in the realm of trade agreements as a non–tariff barrier and prohibited with [sic] some defined exceptions.”[73]  In other words, developing countries might find themselves defending environmental laws against accusations that the laws are impermissible non–tariff trade barriers under WTO/GATT.[74]

Critics cite two primary problems once developing countries reach the enforcement phase: cost of and access to the WTO dispute settlement mechanism. [75]  These problems could be a “potential explanation behind the lack of poor country engagement.”[76]  If these identified problems are confirmed, critics contend that it is possible for developed countries to impose environmentally deleterious measures on developing countries with no fear of punishment.  There is, however, no concrete proof of this phenomenon and until such proof emerges this is only another formulation of the partly undermined anti–competitiveness theory.

What emerges from a review of the literature is that, despite facial neutrality and accommodation of environmental controls, the WTO enforcement mechanism might be prohibitively expensive, time consuming, or lacking appropriate remedies for winning parties.[77]  This assessment would support the argument that international laws are biased against the environmental concerns of developing countries.

B.  In Practice: Which Way Does the Enforcement of Seemingly Neutral Laws Really Cut?

Having reviewed two frameworks–NAFTA/CAFTA and WTO/GATT–one might wonder whether, although theoretically neutral, the enforcement mechanisms are biased in practice.  Reviewing particular cases in which developing countries conflicted with developed countries or their businesses will allow for a better understanding of the extent to which international trade regulations create barriers to developing countries' environmental self–protection.

Although the previous sections may have exemplified serious flaws in environmental and trade agreements, they also underlined the fact that the flaws are not inherently biased against developing countries.[78]  The question remains as to whether, in practice, the system as a whole is biased against developing countries.  This section reviews three cases: Harken v. Costa Rica, United States–Restrictions on Imports of Tuna[79] and Pulp Mills on the River Uruguay (Arg. v. Uru.).[80]  The cases are analyzed to determine whether the theory explored in the previous sections holds true when applied in practice.  The hypothesis that developed countries are not necessarily keeping developing countries polluted survives scrutiny because the decisions reviewed are not generally pro developed countries.  From this analysis, it can further be stated that developing countries are not only capable but successful in defending their environmental standards when they choose to do so.[81]

1.  NAFTA in Private Courts: Harken v. Costa Rica.

The Harken Energy case exemplifies the political and legal defense capabilities of a small, developing country when sued by a large company in a CAFTA–like situation.[82]  This case also demonstrates environmentalists' attachment to the anti–competitiveness theory and a strong focus on victimizing developing countries.  Harken showcases the problem of unquestioningly accepting the anti–competitiveness theory and the analytical shortcomings produced in assessing legal conflicts in the area of environmental protection.

Prior to February 2002, Texas–based Harken Energy obtained rights from the Costa Rican government to perform surveys in search for crude oil along the Costa Rican coastline.[83]  After a national uproar over foreign drilling, “[the President of Costa Rica] announced a moratorium on oil exploration and open–pit mining in Costa Rica.”[84]  Costa Rica, therefore, denied Harken's request for authorization to drill because “Harken's plan was not permissible under the country's environmental impact laws.”[85]  Harken subsequently sued Costa Rica for losses totaling $57 billion.[86]

Harken originally brought its claim to the World Bank's International Center for the Settlement of Investment Disputes (ICSID).[87]  However, Costa Rican President Abel Pacheco refused to submit to ICSID's jurisdiction, insisting that Costa Rican courts were the proper forum for the dispute.[88]  A few days later, Harken withdrew its claim and agreed to out–of–court settlement negotiations.[89]

When Harken officials arrived in Costa Rica, they were greeted with widespread protests.[90]  Commentators proclaimed both the U.S. government and Harken officials were blackmailing the Costa Rican government with the impending CAFTA ratification.[91]

While the case has since been resolved, there is very little information available on the outcome.  Many speculate that this is because Costa Rica was ultimately successful.  In 2005, the Costa Rican government formally rescinded its contract with Harken.[92]  The country paid no damages because Harken had breached one of the terms of the contract by “failing to present an adequate environmental impact study on the oil project.”[93]   Ultimately, Costa Rica imposed its environmental restrictions in the face of international pressure and a multi–billion dollar lawsuit.[94]  So why the uproar?

Many saw Harken as a sign of things to come under NAFTA/CAFTA's impending investor protection provisions.[95]  Under CAFTA, Costa Rica would have had to submit to ICSID jurisdiction.[96]  On the other hand, CAFTA Chapter 10/NAFTA Chapter 11 provisions provide foreign investors with exactly the tools used by Harken: very large dollar–amount lawsuits when developing countries balk at environmentally unsound foreign projects within their borders.

If Costa Rica chooses to ratify CAFTA, it would have to submit itself to ICSID jurisdiction.[97]  However, even when faced with the considerable $57 billion claim, Costa Rica stood its ground and successfully safeguarded both its pocket–book and its coastal region.[98]

The uproar surrounding this particular CAFTA–style case reiterates the criticism identified earlier in this Comment.[99]  Environmentalists and scholars fret over the extremely large amounts claimed in lawsuits filed by foreign investors against developing countries.[100]  However, they fail to look at the concrete results.[101]  Critics  argue that the threat of lawsuits, regardless of the merits, is likely to have a chilling effect on the creation and enforcement of environmental laws protecting those waterways; Costa Rica, as a developing nation, cannot afford to effectively litigate every potential case nor can it afford to pay out a large verdict if it loses.[102]

Despite this strong rhetoric, critics have no evidence of this chilling effect.  Developing countries continue to uphold their environmental laws and strategically position themselves to win lawsuits (for example, as Costa Rica did) by demanding that lawsuits be carried out in domestic courts[103] and appropriate environmental safeguards are in place.[104]

To conclude, although critics have called Harken a “paradigmatic case”[105] for potential CAFTA/NAFTA abuses, it actually stands for the opposite proposition.  Developing countries are not only willing, but also able, to defend themselves against foreign investors.  Costa Rica clearly defended its environmental laws and turned down substantial investment opportunities in the name of its peoples' constitutional right to a clean environment.[106]

However, Harkin is not representative of all international environmental disputes.  Costa Rica brought suit in a domestic court which probably encouraged Harken to settle rather than litigate.  A more interesting question is whether, and how, issues are resolved in non–domestic contexts, such as the WTO/GATT dispute settlement panels.

2.  WTO: United States–Restrictions on Imports of Tuna (Mex. v. U.S.A.).[107]

In 1991, a GATT dispute settlement panel ruled in favor of Mexico in United States–Restrictions on Tuna Import.[108]  The United States Marine Mammal Protection Act (MMPA) prohibited importation of commercial fish or fish products caught using technologies resulting in the accidental killing or injuring of ocean mammals in excess of U.S. standards.[109]  Mexico sought to circumvent this restriction and sued under the WTO.  The U.S. argued, among other things, that the prohibition was permissible[110] under Article XX of the GATT.[111]  The panel disagreed and ruled in Mexico's favor.[112]

United States–Restrictions on Tuna Import is a significant case because it contains three pivotal elements: a developing nation, a developed nation and environmental protection dispute.[113]  However, contrary to what might be expected, the developed country seeking to protect its environment lost.[114]

Scholars correctly use this case to show that the WTO can and does undermine “global and national health policies.”[115] However, nothing in the decision reflects bias against developing countries, such as Mexico.  Mexico was not only able to bring suit, but also win.  For these reasons, United States–Restrictions on Tuna Import exemplifies why it is unwise to accept the argument that the WTO is necessarily a tool for the exploitation of developing countries.

Before assessing the impact of United States– Restrictions on Tuna Import,[116] it is important to note that the WTO did not adopt the case's holding and it is not officially part of WTO law.[117]  It was, however, important in establishing how much power one country can exercise over another's environmental regulations.

In this context, I raise the question whether United States– Restrictions on Tuna Import[118] supports this paper's hypothesis that the world stage is not biased against developing countries attempting to protect their environment or make a place for themselves in the international market place?  The answer is that it depends.

On one hand, a developing country rebuked a developed country.[119]  On the other hand, environmentally safeguarding laws were struck down as being discriminatory,[120] thereby supporting the anti–competitiveness theory of environmental law and trade.  On the whole, the decision does not truly give us an answer regarding WTO bias because the panel decision both supported a developing country and struck down environmental laws.

Nevertheless, the WTO dispute settlement system cannot be looked at so narrowly.  A concentration on actual outcomes overlooks hurdles such as cost or lack of accessibility that the enforcement mechanism, as a whole, presents for developing countries.

The voluntary nature of WTO agreements is one characteristic taken into consideration.[121]  A victory before a WTO panel may not, in the end, prove to be of any use to developing countries.  First, “[d]espite a legal victory on the merits, the economic result of no increased market access (i.e. noncompliance) could arise if developing countries ultimately cannot force respondent compliance due to lack of retaliatory  capacity.”[122]  Second, conversely, a victory might not win the developing country anything of value.  It could, for example, be punished by being denied opportunities available through bilateral agreements or be denied assistance or reductions under other trade agreements.[123]

United States–Restrictions on Tuna Import is important because it exemplifies the nuances of the WTO/GATT system.  The lack of developing–developed country disputes may be a symptom of developing countries' reluctance to enter an arena in which a victory on paper would not provide any actual benefits.  In the context of environmental protections conflicting with trade opportunities, the WTO dispute settlement agreement seems to be the closest to having a potential anti–developing country bias.  This does not mean that it is biased, but that at this point it is hard to point the finger in either direction.  Caution in accusing the WTO of being necessarily at odds with developing countries' attempts to remain environmentally responsible is probably the best policy.

The WTO is one example of an international institution attempting to regulate multiple countries' trade and the related interactions.  Another interesting forum is the bilateral, specifically environmentally oriented, agreement.

3.  The International Court of Justice: Argentina v. Uruguay.

A third forum for the resolution of international environmental disputes is the International Court of Justice (I.C.J.).[124] A recent I.C.J. case, Pulp Mills on the River Uruguay (Arg. v. Uru.)[125] crystallizes why the theory surrounding developing countries' alleged incapacity to compete in the market–place while maintaining environmental integrity is incorrect.

Pulp Mills on the River Uruguay (Arg. v. Uru.)[126]exemplifies an I.C.J. resolution of international environmental disputes.  The case is significant because a developing country, Uruguay, successfully imposed its environmental requirements on two foreign businesses, ENCE and Botnia, despite accusations that it was doing so at the expense of its people.

Botnia, a Finnish company, and ENCE, a Spanish company, both contracted to build one pulp mill on the River Uruguay each.[127]  The Republic of Uruguay imposed one of the strictest environmental regulations: the European Commission's Best Available Technology standards.[128]  In addition, Uruguay imposed a multi–step permitting system by which it would have to issue permits for each phase of construction and operation independently.[129]  Uruguay would only issue each permit upon environmental review and additional environmental impact studies.[130]  The facts in Pulp Mills on the River Uruguay (Arg. v. Uru.) demonstrate two realities: businesses do not necessarily avoid environmentally protective countries and developing countries are perfectly able to negotiate a position for themselves in the market which allows them to capture shares of the market while preserving their environmental health.[131]

ENCE and Botnia received approval from the Uruguayan government in 2003 and 2005 respectively to begin planning for the construction.[132]  The total would consist of $1.7 billion,[133] representing nearly 5% of Uruguay's $33.98 billion Gross Domestic Product in 2005.[134] 

The River Uruguay runs along the Uruguay–Argentina border.[135]  When Uruguay granted approval to start construction of the mills,[136] environmentalists and local Argentineans protested vigorously in an attempt to slow construction.[137]  Ultimately, Argentina sued Uruguay in the I.C.J. for breach of the Rio Uruguay Treaty.[138]

Argentina's claims asserted in large part that Uruguay had failed to fulfill Rio Uruguay Treaty's notification requirements.[139]  Additionally, Argentina asked the I.C.J. to grant injunctive relief because “its rights . . . were ‘under immediate threat of serious and irreparable prejudice” if the mills were built.[140]

The prejudice, Argentina argued, came from the fact that the paper mills would irreparably damage the Argentinean coastline.[141]  Argentina argued that the paper mills would produce nitrogen oxides, sulfuric oxides, and volatile organic compounds.[142]  Uruguay conceded that the plants would pollute to a certain degree, but that they would also need to satisfy contemporary European standards.[143]  Moreover, the plants would have to employ Best Available Techniques.[144]  Uruguay further argued that it imposed a multi–step permitting process through which neither ENCE nor Botnia had yet received approval to begin operations.[145]

At the time of oral arguments, ENCE (the project with the most seniority) had only received approval for “an environmental management plan for site preparation.”[146]  Uruguay's attorney concluded his oral arguments by stating that Uruguay was not only willing, but also able, to deal with any problems created by the two mills.[147]

Uruguay's environmental permitting and monitoring system illustrates a demanding set of requirements.[148]  Environmental protection in Uruguay is a constitutional duty.[149]  Uruguay upholds this duty by enforcing stringent requirements.[150]

Notwithstanding these requirements, environmentalists and scholars alike saw the ENCE and Botnia investments in Uruguay as the businesses of developed countries' creating “pollution havens” in less developed nations.[151]  Botnia, in particular, was attacked for taking advantage of a “defenseless” developing nation.  The CEDHA's criticism was particularly harsh, opining “Botnia ignored stringent environmental and social safeguards . . . to ensure that contaminating industries from the industrialized world do not unduly attempt to gain undue competitive advantage in the developing world by exporting contaminating industries.”[152]

Regardless of the accusations made against Botnia, and by association, ENCE, the fact remains that opponents consistently attempt to make this part of the north–south/developing–developed country debate.[153]  In reality, if someone is to blame, it is the conjunctive efforts of the Uruguayan government and Botnia.[154]  This Comment, however, has also shown that Uruguay is cognizant of its environmental protection duties and has established stringent requirements for both ENCE and Botnia to follow.[155]  It therefore seems that environmentalists' claims of “developed country exploitation” are nothing more than a smoke–screen for their fundamental opposition to a polluting industry along the River Uruguay.[156]

Within the context of this Comment, what is most interesting is that both ENCE and Botnia accepted these requirements and are presumably operating in compliance with this regimented approach to environmental standards.[157]  Uruguay imposed its own environmental standards as well as those currently imposed in the European Union.  Uruguay was thereby able to defend its environment as well as its financial interests in the investments.[158]  Furthermore, Uruguay was able to reach outside its own standards and use European standards.  The use of European Union standards exemplifies the powerful effect international, and apparently unrelated environmental standards, can have on domestic laws because Uruguay adopted them as domestic standards.  This case also demonstrates environmentalists developed country dominion over developing country's independent, self–governing protection of its environment.

II.  Economic Prosperity and Environmental Regulation: Are They at Odds?

The fundamental question addressed in this Comment is whether the environment and economic development are necessarily at odds.  If they are, developing countries will likely have to sacrifice one for the other.  If they are not, then the truth must lie somewhere in between.  Identifying a middle ground is crucial to changing attitudes regarding developing countries' avenues of development and the role businesses may play in this development.

The common assumption–environment and business development are always, necessarily, and unavoidably at odds with each other–is exposed when one considers the significant qualitative and quantitative data that supports the opposite proposition.  Despite this emerging data, commentators refuse to accept the possibility that the assumption may be less than a certainty.  This unwavering assumption constricts the debate and masks the real issues.  Additionally, certain hard–line positions (for example, that developed countries exploit a developing country) mask the real agendas at play in the various conflicts.  For example, some environmental organizations strongly oppose certain treaties (such as CAFTA) or international contracts (such as the one between Uruguay, ENCE and Botnia) but still fail to recognize a developing country's success when faced with powerful industrial opponents.  This type of coverage broadcasts to the public that the developing country is “in danger” but does not convey the happy denouement by which the developing country–Costa Rica or Uruguay for purposes of this Comment–stands its ground.

A.  Background.

For a number of years, the prevalent theory regarding the environment and businesses[159] is that environmental laws and businesses (or prosperity) are at odds.[160]  Commentators and environmentalists often view the relationship as a zero–sum game in which whatever ground gained by businesses is necessarily lost by the environment.[161]  Thus, this theory becomes the fundamental assumption driving the environmental movement.[162]  Although empirical studies have re–shaped this assumption, it is important to keep in the mind that “[t]he prevalent view of the relationship between environment and trade policy . . . suppose[s] that environmental protection measures . . . impose costs on producers of goods that would, at least in theory, adversely affect their competitive position in international trade.”[163]  In other words, the majority view is that, should a company choose to be environmentally friendly, it loses its competitive edge.  By analogy, an environmentally responsible country necessarily loses business attractiveness.  This corollary is explored in the next section.

B.  The Perceived Effect of Anti–Competitiveness on Developing Countries' Choices.

The corollary to the anti–competitiveness theory was, and still is, business and prosperity or environmental health.[164]  This antagonistic ‘relationship' between environmental protection and trade policy created the myth that a developing country had to give up environmental protection if it wanted to prosper and attract business.[165]  This is a patronizing view of developing countries' ability to not only self–regulate but to also defend themselves and their constituents in the international market–place.

Scholars in support of this view attack the various methods developing countries use to respond to market pressures.  First, some scholars simply state that the legislative steps taken by developing countries in fact aid in “exploitation.”[166]  Others identify the problem as being developing countries' “lack of professional and scientific capacities . . . [which] has prevented their enforcement of environmental legal regimes.”[167]  Scholars further generalize statements of this nature by wholesale belittling of developing countries' domestic enforcement policies.[168]  Others identify instances where officials in a developing country act against their country's environmental interests for the sake of business prosperity.[169]  Nonetheless, the few instances of leaders actively permitting environmental abuses cannot, and should not, be used to draw general conclusions that developing countries are necessarily too weak to protect themselves. Common sense dictates that regardless of how concerned countries are regarding the environment, if a certain regime decides to redirect environmental policy of the country, mishaps can take place.[170]

Suggesting the environment is always a negative force in business development inexorably leads to the conclusion that developing countries are indeed faced with two mutually exclusive courses of action.[171]  This is the anti–competitiveness theory's main flaw: either a developing country has to accept pollution or it must remain under–developed.[172]  However, scholars nevertheless adopted the notion that a country must make a choice: get rich or stay clean.

The anti–competitiveness corollary still exists only because of persistent assumptions that developing countries do not have a choice and are unable (or unwilling) to make environmentally sound decisions.[173]  Both of these are paternalistic views of developing countries and recent studies, as well as literature, successfully counter these assumptions.[174]  The most notable illustration of this is Uruguay's exemplary negotiation regarding the River Uruguay pulp mills.[175]  Other illustrations of this phenomenon are explored later in this Comment.

C.  Reconsidering the Anti–Competitiveness Assumption

While most scholars hold fast to this persisting assumption, other scholars reconsider the assumption that the environment and businesses are necessarily at odds with each other.[176]  This reconsideration leads some scholars to the conclusion that the anti–competitiveness theory is little more than a faulty theory driven by externalities and “unquestioned assumptions that have guided policymakers for 25 years.”[177]

Spurring this reconsideration are empirical studies and observations regarding business relocations.[178]  For example, there is evidence that industries with high levels of pollution reached higher levels of prosperity than equivalent businesses in so–called developing country pollution havens: “[T]he industries incurring high environmental control costs in industrial countries, which have stronger environmental control regimes, actually did better in maintaining their international market share than other domestic manufacturers less affected by environmental regulation.”[179]  Recent literature has been increasingly persuasive that the empirical evidence “indicates that there is no need for a country to adopt weak environmental standards, or to be lax in the enforcement of the standards that are in place, in order to protect its international economic competitiveness.”[180]  Furthermore, studies show that “open economies” with lower environmental standards do not necessarily become “pollution havens.”[181]

Therefore, there is at least moderate evidence against the anti–competitiveness theory of international environmental regulation both in empirical market–share calculations and from observing the behavior of various international businesses and their relocation choices.  The default assumption that developing countries are necessarily in a position of weakness when it comes to environmental protection and business competition should, at a minimum, no longer be accepted at face value.  Despite this, and as the following section shows, the anti–competitiveness theory is still widely accepted.

D.  The Assumption Lives On

Unfortunately, this realization has not yet affected the way scholars and environmental activists view their relationship.[182]  For example, in early 2006, one commentator stated that, in the context of CAFTA ratification, “the benefits of privatization are enjoyed almost entirely by the international organizations, and those benefits come at a very high cost to the citizens and the environments of these [developing] countries.”[183]  The fact that a necessary and unavoidable, mutually exclusive relationship exists between business competitiveness and environmental regulations still pervades many people's understanding of the international stage.[184]

The WTO/GATT framework is the lightning rod for criticism directed at the liberalization of trade and its negative effects on environmental regulation.[185]  More specifically, critics argue that the WTO/GATT model superficially attempts to protect public health and the environment, while in reality, liberalization of trade and the organizational framework actually favor trade over environmental preservation.[186]  Additionally, some critics argue that GATT is inherently incapable of providing help in the environmental sphere because it is a tool uniquely crafted for trade.[187]  These observations reflect how ingrained the belief the environment and business are necessarily at odds actually is.

It may well be that in certain cases, weak environmental protection laws, desperate governments or overwhelmed environmental protection offices facilitate the spread of dangerous industries.  This does not, however, indicate a zero–sum game between the environment and industry.  Developing countries have a lot more say within their own borders than is generally recognized, and businesses are willing to absorb environmentally related externalities much more than commentators like to believe.[188]

Given Pulp Mills on the River Uruguay (Arg. v. Uru.) and the empirical evidence available, it is imprudent to unquestioningly accept that environmental protection and business development are necessarily in contention.[189]  It is also patronizing and narrow–minded to victimize developing nations.  The truth lies somewhere in between the environment, businesses, and developing countries' weaknesses and strengths. 

Conclusion

This Comment's aim is to give an overview of environmental law on the international stage, its shortcomings when faced with market forces, and the possible avenues for enforcement and remedies available to developing countries.  This analysis reveals that international environmental law is not, in fact, making developing countries dirtier and developed countries richer.  The picture is far more complicated than that, and it is made more complicated by various actors (environmentalists, multi–national organizations, Non Governmental Organization's, governments and populations) each vying for their own agenda.

Criticism leveled at various institutions and “arrangements,” such as NAFTA/CAFTA, WTO, and national contracts with foreign investors, revolves around the perception that the WTO with its dispute settlement panels and the various arrangements (such as NAFTA/CAFTA) create insurmountable hurdles for developing countries and do so at the expense of the countries' environments.[190]  These hurdles span the gamut: reduced possibilities for debate, insufficient national resources to tackle environmental problems, “unwinnable” litigation, diplomatic blackmail, and inherently unfair agreement language.[191]

An overview of the agreements themselves uncovers significant flaws which arguably give foreign investors too much power in the various domestic arenas (NAFTA Chapter 11/CAFTA Chapter 10 is a prime example of this).[192]  However, these shortcomings seem neutral in that they affect all parties to the agreements, both developed and developing countries.  The more critics make their arguments, the more they demonstrate that if something has to change it is the system as a whole, not who supposedly “controls” it.[193]

The three paradigmatic cases for enforcement of environmental protections in the investment setting show that regardless of where developing countries fight their battles–their own domestic courts for Costa Rica,[194] the International Court of Justice for Uruguay and Argentina,[195] or the WTO Dispute Settlement Panel for Mexico–[196] a lawsuit does not necessarily mean a loss.  Costa Rica obtained a resounding victory that largely went unmentioned in activist literature.[197]  Uruguay was able to attract a significant investment while imposing environmental restrictions.[198]  Mexico won against the United States in demanding equal treatment in the marketplace.[199]

NAFTA/CAFTA and traditional international treaties such as the one entered into by Uruguay and Argentina are not inherently biased against developing countries, or at least, no real evidence of such bias has been convincingly presented so far.  In the case of WTO disputes, a word of caution is appropriate.  Having reviewed the literature, it seems that the numbers of cases, identity of the parties, and outcomes may not give a clear picture of WTO dispute settlement. 

However, before the various bi- and multi-lateral agreements can be looked at objectively, a fundamental shift in mentality needs to take place.  The anti–competitiveness theory of environmental law must be viewed as a possible theory, not as an absolute truth.  As long as scholars and activists describe developing countries as helpless nations incapable of fending for themselves,[200] any attempt to understand international environmental law and how it affects developing countries' attempts to enter the market will remain fruitless.