Twenty-three days after the World Trade Organization was born in 1995, the new agency received its first official trade complaint: Venezuela alleged that clean-air rules in the United States were unfairly favoring U.S. refineries' gasoline over Venezuelan fuel. It demanded a change. No way, replied the United States--the rules are reasonable and help keep the air clean.
So began a case that has come to encapsulate environmentalists' belief that the WTO can force countries to weaken their protection of clean air and water.
The gasoline case lasted 16 months. It was conducted in secret, as all such WTO proceedings are, and generated mountains of paper and large legal fees. Officials argued before a WTO disputes tribunal in Geneva over the technicalities of refining, methods of calculating pollution, and the meaning of the words "related to" and "in conjunction with" as they appear in international trade rules.
In the end, the United States lost. In 1997 it changed its clean air rule to comply with the decision, after lengthy consultations with Venezuela and Brazil, which had joined the case.
The dispute arose because of 1990 changes in the Clean Air Act. To implement it, the Environmental Protection Agency established in 1994 a program to make the gasoline powering American automobiles progressively purer and less polluting.
U.S. refineries used one of two methods for measuring improvements. They could calculate from a "baseline" for the purity of gas that the individual refinery produced in 1990, or they could work from an average of all refineries' figures.
But EPA officials in effect insisted that gasoline importers work only from the average baseline. The regulators feared that otherwise, given the sometimes lax regulation in foreign countries, foreign refineries could "game" the system, resulting in dirty gas entering the country.
U.S. officials contended during the proceedings that such "gaming" could mean carbon monoxide emissions from imported gasoline would rise 5.6 percent to 7 percent, producing an extra 115,000 tons of pollutants.
The difference in treatment, Venezuela charged in its Jan. 23, 1995, filing, amounted to unfair discrimination between foreign and domestic gasoline. The WTO panel agreed, saying U.S. gasoline benefited, compared with chemically identical imported gasoline. The United States appealed to another WTO forum; it lost again.
The United States could have accepted sanctions or paid "damages" to the foreign parties. It chose to change its rules to let foreign refineries establish individual baselines. EPA officials maintain that, regardless of what the U.S. side argued in Geneva, they have now devised strict auditing measures that assure there will be no cheating.
Environmentalists scoff. "We call this trade uber alles" [over all], Lori Wallach, of Public Citizen, said of the WTO ruling. "Every other legitimate value like health or the environment is subjugated to commercial goals."
Two years later, there is no way to measure whether the ruling resulted in dirtier air. Imported gasoline accounts for only about 5 percent of U.S. consumption, though the rate is much higher on the East Coast.