ACCESS TO FRESH WATER - BASIC SANITATION AND INTERNATIONAL TRADE LAW

Transcription

1 Fitzgerald Temmerman Doctoral Research Fellow World Trade Institute, Bern ACCESS TO FRESH WATER - BASIC SANITATION AND INTERNATIONAL TRADE LAW NCCR Climate / NCCR Trade Regulation Second Joint Workshop UniS, Bern November 11, 2010

2 On the global level, since the beginning of the 20th century, the percentage of the population facing chronic water shortage (<1000 m3/capita/year) has been constantly increasing* -Year 1900: 2% -Year 1960: 9% -Year 2005: 35% -Year 2050: 45% (?) *Kummu, M., Ward, P.J., de Moel, H. and Varis, O. (2010) Is physical water scarcity a new phenomenon? Global assessment of waters shortage over the last two millennia. Environmental Research Letters, p. 1 (data) and 6 (figure).

3 -Fresh water resources (only 2,5% of total water resources) are becoming increasingly scarce in many regions and countries of the world -Causes: -Population growth, -Industrial and agricultural development -Global warming acting as an accelerator -Impacts of Climate Change on Fresh Water Resources: -More droughts: desertification <> food security (Russia, Middle - East, North Africa, and China) -Accelerated melting of glaciers: after initial increases the water run offs for rivers fed by glaciers will significantly reduce <> food security (India) -Extreme weather conditions will increase: more flooding <> contamination of fresh water resources (Pakistan)

4 At present: 884 million people on the planet lack sufficient access to safe drinking water 2.6 billion people lack access to basic sanitation As a consequence 2.2 million children under the age of 5 die every year Of all bio-systems, freshwater ecosystems are the most threatened, and 1/5 th of freshwater fish species are in rapid decline 70 % of fresh water use is due to irrigation in agriculture (overuse - subsidies issue) The Yellow river in China doesn t reach the sea anymore for about 200 days a year

5 The shrinking of the Aral sea

6 Solutions: -Technological progress -International trade (law) I. Trade in (bulk) fresh water and international trade law International trade (by ship, pipeline, artificial canal) in bulk (large amounts of) fresh water is slowly emerging and not subject to GATT international trade law rules yet; it is still an open question if bulk fresh water is to be considered as a commercial good or a common good. 10 countries possess 60% of fresh water: Water Poverty Index (WPI)*: (1) Brazil 14,9% (1) Finland (2) Russia 8,1 % (2) Canada (3) Canada 6 % (3) Iceland (4) United States 5,6 % (4) Norway (5) Indonesia 5,1 % (5) Guyana (6) China 5,1 % (6) Suriname (7) Columbia 3,9 % (7) Austria (8) Peru 3,5 % (8) Ireland (9) India 3,5 % (9) Sweden (10) Rep. of Congo 2,3 %. (10) Switzerland * taking into account availability to the popultaion, management and infrastructure

7 II III. Trade in virtual water and international trade law Trade in sanitation services and international trade law Research questions: -Is bulk fresh water to be considered a common good or a tradable commodity? (GATT) -What are the consequences of bringing bulk fresh water under international trade law rules? (GATT) -How could international trade law give incentives to stimulate imports of virtual water in water-scarce countries and exports of virtual water in water-rich countries? (GATT) -How to diminish irrigation subsidies, especially in water scarce countries? Take into account environmental harm as non-trade concern? (AoA/SCM) -On the other hand, could the international trade regime take into account social and environmental benefits of other water related subsidies? Ex.: subsidize a minimum supply of fresh water to the poorest. -Labelling the water footprint of products? (TBT) -How to deal with water services under the GATS, taking into account the right to water and sanitation?

8 I. TRADE IN BULK FRESH WATER Selected Literature BROWN - WEISS, E., Water transfers and international trade law in Fresh Water and International Economic Law, ed. By Brown-Weiss, E, Boisson de Chazournes, L. and Bernasconi-Osterwalder, N., Oxford: Oxford University Press 2005, 480 (p ). BAILLAT, A., International Trade in Water Rights, the next step. 2010, London: IWA Publishing. CULLET, P., et al., eds. Water Law for the Twenty-First Century: national and international aspects of water law reform in India. 2010, Routledge: London and New York RAZZAQUE, J., Trading Water: The Human Factor. Review of European Community and Environmental Law (RECIEL), (1): p Until today, only few International trade in bulk fresh water, potentially subject to GATT international trade law rules has occurred: -(Ex. 1) In the summer of 2008 the city of Barcelona was supplied with water tankers by Société des Eaux de Marseille with fresh water taken from the Rhone in Marseille; -(Ex. 2) Also in the summer of 2008 Greece had to supply the city of Limassol in Cyprus in emergency with water tankers ; -(Ex. 3) Some transfers on a regularly basis between Turkey and Israel were in the negotiating path but were abandoned in the end, because transport costs revealed being too high (oil price increase).

9 Question: If bulk fresh water would be considered to be a good or product subject to GATT international trade law rules, what would be the legal consequences? -Articles I (MFN), III (NT), XI (elimination of quantitative restrictions) and XX (general exceptions) GATT would come into play. Consequence (1): A state s ban (or restrictions) on import or export of bulk fresh water could violate article XI GATT unless this was covered by an exception under XI 2 (a) (food-security), XX (b) (human, animal, plant life or health) or XX (g) (conservation of exhaustible resources). -If there would be an exception allowable under GATT XX (b) or (g) then you still have to pass the art. XX Chapeau test: Act in good faith; no arbitrary or unjustifiable discrimination or disguised restriction on international trade -In other words, once a country starts trading bulk fresh water it would become quite difficult to stop doing so, unless temporality if there where very good reasons like environmental concern or national food security. -If it should come to a severe water crisis world wide, GATT international trade law rules would be a suitable regime to more efficiently share the world s fresh water resources (water rich countries are more or less pushed to share their water on an economic basis).

10 Consequence (2): export restrictions on bulk fresh water would be challengeable under GATT international trade law rules. There is no WTO case law related to water issues so far. This will have to develop building upon previous case law regarding article XI 2 (a) and XX GATT, eventually taking into account also the realization of the human right to water and environmental protection concerns (non trade considerations). Ex. (1) Trade in bulk fresh water under GATT: If Turkey would grant an export license for bulk fresh water to a foreign company, other foreign companies who would be interested in selling Turkish bulk fresh water, could apply for an export license under the same conditions (MFN general obligation under the GATS). If Turkey then would like to restrict on exportations, this has to be done in accordance to articles XI and XX GATT. Ex. (2): If Turkey would grant an export license for bulk fresh water to a national company, then foreign companies who would be interested in selling Turkish bulk fresh water, could apply for an export license only if Turkey made specific commitments under MODE 3 of the GATS (NT is a specific commitment unlike NAFTA provisions). If Turkey then would like to restrict on exportations, this has to be done in accordance to articles XI and XX GATT.

11 II. VIRTUAL WATER TRADE Selected Literature BERNASCONI-OSTERWALDER, N. Water, Agriculture and subsidies in the International Trading System in Fresh Water and International Trade Law, E. Brown - Weiss, L. Boisson de Chazournes and N. Bernasconi Osterwalder, Oxford University Press, 2005 HOEKSTRA A.Y. and A.K. CHAPAGAIN, Globalization of Water: Sharing the Planets Freshwater Resources, 2008, Malden: Blackwell Publishing, 208 p. HOEKSTRA, A.Y., The relation between international trade and freshwater scarcity. 2010, World Trade Organization Economic Research and Statistics Division. -The so-called virtual water def.: the amount of water required to produce something = water embedded in the (agricultural or industrial) product. -Question for water scarce countries: How much water is saved by importing a product rather then producing it yourself? -Trade strategy to achieve water security in water scarce countries. -Problem: the production of water intensive crops in water scarce countries and regions (often for export). This is still very common. Q.: How could international trade law give incentives to discourage such trade flaws? (Subsidies issue and a labelling issue)

12 Global average virtual water content of some selected products, per unit of product* 1 glass of beer (250 ml) 75 1 glass of milk (200 ml) cup of coffee (125 ml) cup of tea (250 ml) 35 1 potato (100 g) 25 1 apple (100 g) 70 1 cotton T-shirt (250 g) sheet of A4-paper (80 g/m2) 10 1 glass of wine (125 ml) glass of apple juice (200 ml) glass of orange juice (200 ml) egg (40 g) hamburger (150 g) pair of shoes (bovine leather) microchip (2 g) 32 1 kg of grain kg of cheese kg of beef *Water footprints of nations: Water use by people as a function of their consumption pattern, A. Y. Hoekstra A. K. Chapagain (2005)

13 -Subsidies issue -Irrigation subsidies in many cases leading to: -Growing of water intensive crops in water scarce regions (overuse of rivers and underground water) -Wasting water -Pollution -Soil erosion -Salinization -This concerns AoA rules on domestic support which require the reduction of all domestic support which is considered to be trade distorting (Amber box listing). Irrigation subsidies however, are mostly listed under the Green box as having neglectable trade distorting effects. Members decided themselves in which category they list subsidies. No control organism. No remedies. -Q.: Could you take into account also non trade concerns (subsidies being environmental beneficial or not)? -labelling (and PPM) - issue Water footprint of the product - consumer info - creating awareness

14 III. INVESTMENT GATS and PRIVATIZATIONS IN THE WATER SERVICE SECTOR Selected Literature COSSY, M. Water Services at the WTO in Fresh Water and International Trade Law, BROWN - WEISS, E. BOISSON de CHAZOURNES, L. and BERNASCONI OSTERWALDER, N. Oxford University Press, 2005 (p ) TUERK, E., OSTROVSKY, A. and SPEED, R., GATS and its Impact on Private Sector Participation in Water Services in Fresh Water and International Trade Law, BROWN WEISS, E., BOISSON de CHAZOURNES, L. and BERNASCONI OSTERWALDER, N., Oxford University Press, 2005 (p ) BOURQUAIN, K., Freshwater Access from a Human Rights Perspective: a challenge to International Water and Human Rights Law, International Studies in Human Rights Law. 2008, Leiden and Boston: Martinus Nijhoff Publishers, 258 p. THIELBORGER, P. The Human Right to Water versus Investor Rights, Double-dilemma or Pseudo-conflict? in Human Rights in International Investment Law and Arbitration, ed. DUPUIS, P.M. FRANCIONI, F. and PETERSMANN, E.U. Oxford University Press, 2009 (p ) -GATS can potentially play an important role in helping achieving MDG 7, target 3 which states: to halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation -GATS rules could also be an important tool in order to help states to realize the right to water and basic sanitation

15 -The state has obligations to respect, protect and progressively fulfill the human right to water and sanitation -For example, violations of the obligation to respect include disproportionate or discriminatory increases in the price of water. -The 2010 report of the independent expert on the issue of human rights obligations related to access to safe drinking water and sanitation holds that the realization of the right to water and sanitation is not a priori hindered nor enforced by privatizations as such. Crucial however is that nation States are able to rely on enforced legislation if they choose to do so, in order not to loose control and the power to adjust if thing threaten to go wrong (cfr. Privatization failures in Argentina and Bolivia) -So far no developing countries have made specific commitments under the GATS in order to liberalize their water service markets

16 The state cannot leave the free market in full control but has to be able to regulate further in the field by, for example, by imposing USOs or only granting a regional monopoly in the more wealthy areas. The state must also be able to retake control if things go wrong. All this though can potentially be rendered impossible by making GATS specific commitments on NT and MA, unless adequate horizontal limitations are made (in order to avoid the lock in effect or irreversibility of GATS specific commitments). -Interpretation problems of the GATS rules on MA (Art. XVI) and NT (Art. XVII) in the water (distribution) service area. 1) Ex: GATS article I:3 (b) and (c) Carve out from GATS disciplines for services provided in the exercise of governmental authority. A service supplied in the exercise of a governmental authority means any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers. Water services could fall under this definition but the meaning of the words on a commercial basis and in the exercise of a governmental authority is not clear.

17 2) Ex: GATS article XIII on government procurement which states that MFN, NT and MA obligations shall not apply to laws, regulations or requirements governing the procurement by governmental agencies or services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of services for commercial sale Here, the question arises if concession, BOTs and management contracts for water services concluded with the private sector could fall under the definition of government procurement and thus be excluded from GATS disciplines. 3) Ex.: Article XVI:2 (c) GATS which states that if MA commitments are undertaken, A member may not adopt measures putting limitations on the total number of service operations or on the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test. Here, the question is whether a limitation on the quantity of water which can be withdrawn could be considered as being a prohibited limitation on the service output.

18 THANK YOU FOR YOUR ATTENTION!