Toward SuSTainabiliTy: The roleS and limiTaTionS of ... - Resolve

Chapter 2: Actors – Government 32that importers show they are not importingillegally harvested wood. Certification schemesthat encompass chain-of-custody requirementsto verify the source of imported products haveemerged as an effective way to demonstrate thisdue diligence (Cashore & Stone, 2012).Antitrust LawsAs discussed in Chapter 1, “roundtables” thatbring industry competitors, NGOs, and otherstogether to seek agreement on environmentaland social issues have been an increasinglycommon route for developing standards and, insome cases, certification systems. Roundtablesare often described as “precompetitive” discussions,based on the idea that the sustainability (orunsustainability) of raw material production andsupply affects all businesses in a sector. To minimizeconcerns about anti-competitive behavior,roundtables have established antitrust policiesthat explicitly state the topics that can and cannotbe discussed, and these policies are intended toensure compliance with national antitrust laws(Roundtable on the Application of Antitrust Lawto State-Owned Enterprises, 2009).International Trade AgreementsIntergovernmental free-trade agreements caninject legal uncertainty into the internationalarena. Carey and Guttenstein (2008) observethat, despite analyses indicating that certificationschemes are legal under international tradeagreements, debates continue regarding whethersuch schemes promote protectionist interestsor allow nations to impose their own policieson other nations. Bernstein and Hannah (2008)argue that the more widespread the supportfor certification becomes, the more likely it isto conflict with the international trade regime.For example, the European Union and othergovernments and intergovernmental agenciesincreasingly are developing sustainable procurementpolicies that can promote certification.Yet some governments and commentators viewthese standards as a veiled way to discriminateagainst developing countries’ products. As longas certification is voluntary, or is limited to nichemarkets, it is less likely to be subject to tradedisputes. But as governments increasingly recognize,favor, or require it, exporting countries aremore likely to claim that certification is mandatoryin practice and is therefore a de facto barrier totrade (Bernstein & Hannah, 2008).Voluntary standards considered to be mandatoryin practice have been the subject of severaltrade disputes under WTO law already. In thesecases, the determination of whether a standard ormeasure was de facto mandatory depended uponwhether it had the effect of being legally bindingand whether there was a trade consequencefor failing to adhere to it. These concerns onlyapply to a standard adopted and implementedby a WTO member government; those operatedindependently of governments are less vulnerableto trade challenges (Bernstein & Hannah, 2008).Government as PolicyMaker and EnforcerRegulatory PoliciesGovernments can stimulate certification indirectly,most obviously by failing to regulateenvironmental or social practices and therebycreating incentives for the emergence of privatecertification schemes. Some believe that such afailure to regulate stimulated the creation of theFSC, the MSC, and others (Cashore, et al., 2004).Conversely, the threat of government regulationin the absence of certification might also spurthe development of private schemes (Meidinger,2006). If a critical mass of industry players participatesin a certification scheme (or creates theillusion of participating), political pressure forgovernment regulation might be alleviated, andregulation avoided. The risk for governmentsin these cases is that industry might establishstandards that are perhaps better than existingconditions but not as high as what the governmentor others would prefer. Moreover, sincecertification is voluntary, a subset of industryplayers—potentially the worst players with themost significant environmental impacts—maynot participate. An alternative for governmentsmight be to provide companies taking part incertification schemes with favorable treatmentToward Sustainability: The Roles and Limitations of Certification