Environmental marketing and the use of ecolabels—product marks that indicate that the labeled product meets some environmental standard—have exploded in recent years. As of May 2014, Ecolabel Index counted 448 ecolabels in 197 countries. These labels theoretically enable the market to promote environmentally friendly production and consumption choices. But they can also spawn “greenwashing” and “green protectionism.” Producers making misleading claims of environmental superiority taint the market as a whole, discouraging consumers who profess desires to purchase sustainable products from trusting green marketing. Countries employing ecolabels to protect domestic producers under the guise of environmental sustainability can distort trade without providing redeeming environmental benefits. For ecolabels to realize their full potential in encouraging sustainable production in a less trade-restrictive manner, they must be better policed.
International trade law under the World Trade Organization (WTO) can help police ecolabels for enhanced credibility and impact. To date, environmentalists have largely opposed WTO oversight, because the organization has struck down so many of the environmental regulations that it has considered and thus appears anti-environment. As a result, most of the relevant literature focuses on how to evade, not exploit, WTO jurisdiction. But the WTO is not opposed to environmental regulation per se. Rather, WTO jurisprudence aims to preclude trade distortion that is not justified by legitimate regulatory motivations. Its resulting antipathy to green protectionism shares much in common with environmentalist aversion to greenwashing, as both recognize that ecolabels provide economic and environmental benefits only if truthful and trustworthy; environmentalists and free trade advocate interests are aligned. And because ecolabels are market-based tools, the WTO’s experience in policing the free market can benefit labeling.
While a handful of voices also recognize the advantages of WTO oversight, I add to the dialogue updated analysis of recent jurisprudence further explaining the workings of the Agreement on the Technical Barriers to Trade (TBT Agreement) and an account of contemporary effects of such jurisprudence on domestic regulations.