The Montreal Protocol is an international treaty on substances that deplete the Ozone Layer. It is designed to protect the ozone layer by phasing out the production of a number of substances believed to be responsible for ozone depletion. The treaty was opened for signature on September 16, 1987 and entered into force on January 1, 1989 followed by a first meeting in Helsinki, May 1989. Since then, it has undergone seven revisions, in 1990 (London), 1991 (Nairobi), 1992 (Copenhagen), 1993 (Bangkok), 1995 (Vienna), 1997 (Montreal), and 1999 (Beijing). Due to its widespread adoption and implementation it has been hailed as an example of exceptional international co-operation with Kofi Annan quoted as saying it is "Perhaps the single most successful international agreement to date

According to UNIDO - "If we did not had Montreal Protocol the levels of ozone-depleting substances would have been five times higher than they are today, and surface ultraviolet-B radiation levels would have doubled at mid-latitudes in the northern hemisphere. On current estimates the CFC concentration in the ozone layer is expected to decline to pre-1980 levels by 2050".
                                    

MONTREAL PROTOCOL

IDENTIFICATION

1. The Issue

The Montreal Protocol on Substances that Deplete the Ozone Layer is one of the first international environmental agreements that includes trade sanctions to achieve the stated goals of a treaty. It also offers major incentives for non-signatory nations to sign the agreement. The treaty negotiators justified the sanctions because depletion of the ozone layer is an environmental problem most effectively addressed on the global level. Furthermore, without the trade sanctions, there would be economic incentives for non-signatories to increase production, damaging the competitiveness of the industries in the signatory nations as well as decreasing the search for less damaging CFC alternatives.

2. Description

Man-made chlorines, primarily chloroflourobcarbons (CFCs), contribute to the thinning of the ozone layer and allow larger quantities of harmful ultraviolet rays to reach the earth. The U.S. environmental Protection Agency (EPA) has estimated that by the year 2075, the increased ultraviolet rays could result in over 150 million new cases of skin cancer in the U.S. alone, with the consequence of 3 million deaths. Other damage caused by ultraviolet rays includes increased eye cataracts, and a
weakening of the body's immune system.

The Montreal Protocol's trade sanctions are a novel approach to achieving multilateral treaty goals. Because non-party nations could negate efforts to reduce use and production of ozone destroying chemicals, the treaty negotiators included staged restrictions in the Protocol on imports and exports. Developing nations were encouraged to become party to the
Protocol within ten years.

Several options were considered for CFC and halon emission control measures. One option considered was to "allocate emission rights on the basis of gross national product and population." With this option it would be very difficult to measure emissions, especially due to the time lag between CFC production and their release into atmosphere. A second option was regulating the production of the ozone depleting chemicals.
This was decided against because of the monopoly rights it would confer on the producers. These rights could allow price increases to the benefit of the producers.

The consumption controlling formula eventually decided upon was consumption equals production plus imports minus exports.  Jamison Koehler and Scott A. Hajost of the U.S. EPA argue:

First, the formula promotes economic efficiency and free trade while achieving the same environmental benefit, as Parties adjust production, imports and exports of the controlled chemicals to take advantage of economies of scale and other market forces. Second, by allowing parties to subtract exports from the consumption equation, the formula ensures that non- producing nations continue to have access to the controlled chemicals until substitute chemicals are available, thereby removing production and consumption limits, the formula implicitly recognizes the interests of a much wider range of Parties -- producers and users
of the chemicals alike -- in the protection of the ozone layer.

Article IV of the Montreal Protocol addresses Control of Trade with non-parties. The measures stipulates that one year after the Treaty came into force, all imports of "controlled substances" (see Appendix 1) from any non-party states are banned and that as of January 1, 1993, none of the signatories are allowed to export a controlled substance to non-party states. Further, a product annex was to be developed listing the controlled substances which are also banned one year after the annex was developed. The parties were to consider the feasibility of banning or restricting imports produced with controlled substances and to discourage exports of technology to produce and use controlled substances to non-parties. The trade measures attempt to ensure that there are no economic benefits from CFC production for non-signatory nations.

Developing nations, including highly populated China and India, are expanding their use of products which contain CFCs, such as refrigerators and air conditioners. Developing countries argue that they have the right to enjoy the same conveniences that developed nations have and that they are not responsible for the ozone damage. This debate resulted in Article Five of the Protocol which allows the signatory developing nations a ten year delay for implementation of controls. In June, 1990 a $100
million World Bank fund was set up to aid the developing nations efforts to reduce CFC usage. Many fear that the gains in the treaty will be eroded by the concessions to developing countries regarding their date of compliance.

Trade considerations played a major role in the original negotiation of the Montreal Protocol. By the late 1970s the U.S. Congress had reduced U.S. production of CFCs for aerosols by 95 percent, but the European Community (EC) member states (except for West Germany) were not considering legislation. The EC position was that there was not enough scientific evidence to justify legislation and that CFC substitutes would be extremely costly to develop. U.S. industry felt it unfair that EC industry
did not have to face similar economic obstacles, while the Europeans believed U.S. industry was advocating CFC reductions because it assisted their competitive advantage.

The EC supported a production capacity cap, while Canada, Finland, New Zealand, Norway, Sweden, Switzerland and the United States (joined later by Belgium, Denmark, Germany and the Netherlands) supported production cuts. The EC would have had a virtual monopoly on CFC production if controls were implemented at the point of production. This issue was settled by the formula mentioned above: consumption equals production plus imports minus exports. The final 50 percent reduction, signed in
September 1987, was a compromise between the 95 percent reductions of ozone depleting gases that the United States called for and the 10 to 20 percent the EC expected.

In June, 1990, because scientific evidence demonstrated a more rapid deterioration of the ozone layer than had been previously estimated, representatives from 59 countries signed revised goals committing to the phase-out of most CFCs by the year 2000 and the creation of a $160 million fund to aid developing countries in their transition to other less ozone damaging chemicals. The EC committed to phasing out CFCs by 1997.

Some argue that the Montreal Protocol trade sanctions may clash with GATT disciplines. "The Montreal Protocol...for example, contains provisions for trade retaliation against states which do not comply with the protocol. Such retaliation, as yet untried, would conflict with the GATT treaty and CFC offenders could claim the protection of GATT against trade sanctions."  The protocol may conflict with GATT in several ways: Article XI generally forbids import and export restrictions except tariffs and the most favored nation clause which stipulates that tariffs should be applied equally to all GATT members products.  Furthermore, the GATT does dictate that nations apply the same standards to imports that they do to domestic products, and prior to the phase out of controlled substances, imports from party nations would be treated differently from the banned imports of non-party nations. However, the ultimate goal of the trade
provisions of the revised (in London, 1990) Montreal Protocol are zero imports, exports and consumption of some of the ozone depleting substances.

As the allowed quotas of ozone damaging chemicals move toward zero and as the ten year delay provided to developing nations comes to an end, it is likely that some nations will present arguments to GATT. It would be extremely difficult to achieve the goals of the Montreal Protocol without the trade sanctions; therefore, a GATT ruling against the sanctions would
allow environmental damage that many nations have decided require
drastic actions to address.

The Montreal Protocol is a landmark environmental treaty.  It may serve as a model for future multilateral treaties which confront global issues, although just as the treaty negotiators selected the trade sanctions only after ruling out other less optimal alternatives, future negotiators should also weigh all their options.

Between 1986 and 1993, world CFC production fell by about 60 percent, from about 0.9 millions tons to about 0.4 million.  While large companies like DuPont have deeply invested into alternatives such as HFCs, supposedly that are less damaging to the ozone. Negotyiators are also considering the addition of HCFCs to its banned substances.

Developing country production, however, has exploded, rising 87 percent over the period, with exports rising 17 fold.  Furthermore, a huge black market has arisen, with estimates that 20 percent of sales are illegal and originate in developing countries. Part of the reason is that promised funding to developing countries was less than promised, $126 million of $149 million.(1)

3. Related Cases

SST case
BIODIV case
CLEAN case

Keyword Clusters

(1): Trade Product = CFCs
(2): Bio-geography = GLOBAL
(3): environmental Problem = OZONE loss

4. Draft Author: Michelle Dearing
Completed: 6/1993 Updated: 3/1996

B. LEGAL Filters

5. Discourse and Status: AGReement and COMPlete

6. Forum and Scope: UN and GLOBAL

The Montreal Protocol negotiations were conducted under a framework agreed to in the 1985 Vienna Convention for the Protection of the Ozone Layer. The negotiations were conducted under the auspices of the United Nations environment Programme (UNEP) under Executive Director Mostafa Tolba.

U.S. Legislation revised Montreal Protocol requirements are met or exceeded in the U.S. Clean Air Act Amendments of 1990, PL 101-549. Fiscal 1990 and 1991 budget reconciliation bills, PL 100-239 and PL 101-508 respectively, include excise taxes on Montreal Protocol controlled substances.

EC Legislation was set in Council Regulation (EEC) No. 594/91 set quantitative limits on imports from third countries for controlled substances from 1991 through 2005 when imports will be zero for all substances covered by the Regulation.
Commission Decision, 91/359/EEC, dated July 15, 1991, allocated import quotas of chlorofluorocarbons (CFCs) for the time period July 1, 1991 to December 31, 1992.

7. Decision Breadth: 100 (signatories)

8. Legal Standing: TREATY

C. GEOGRAPHIC Filters

9. Geographic Locations

a. Geographic Domain : GLOBAL
b. Geographic Site : GLOBAL
c. Geographic Impact : GLOBAL

10. Sub-National Factors: NO

11. Type of Habitat: GLOBAL

D. TRADE Filters

12. Type of Measure: Import Ban [IMBAN]

The primary mode for curtailing CFC use was in production, but quota enforcement was left to import bans (and phased import bans) with the possibility of retaliation against violators. As of January, 1993, no signatory nations were allowed to import controlled substances from non-signatories (see Table 48-1).
These ozone-depleting potentials are estimates based on existing knowledge and are to be reviewed and revised periodically.

Table 48-1
CONTROLLED SUBSTANCES

Group Substance Ozone-depleting potential*

Group I CFCl3 (CFC-11) 1.0
CF2Cl2 (CFC-12) 1.0
C2F3Cl3 (CFC-113) 0.8
C2F4Cl2 (CFC-114) 1.0
C2F5Cl (CFC-115) 0.6

Group II CF2BrCl (halon-1211) 3.0
CF3Br (halon-1301) 10.0
C2F4Br2 (halon-2402) na

* With CFC-11 as base.

13. Direct vs. Indirect Impacts: DIRect

14. Relation of Trade Measure to Resource Impact

a. Directly Related : YES CFCs
b. Indirectly Related : YES products using CFCs
c. Not Related : YES RETALiation
d. Process Related : YES OZONE depletion

The measure bans the import of CFCs and permits retaliation against offenders. Not only does it directly ban the trade of CFCs but also products which relate to the CFCs as a component part (refrigerators and air conditioners) or products which are used in certain ways, such as the cleaning of computer products.

15. Trade Product Identification: CFCs

CFCs and halons are chemicals used widely as refrigerants, in aerosols, for cleaning circuit boards and electronic components, and other industrial applications.

16. Economic Data

Production of CFCs increased from 150,000 metric tons in 1960 to over 800,000 metric tons in 1974. EC exports increased 43 percent from 1976 to 1985 and exports averaged one third of EC production. Almost all of U.S. production was consumed in the United States. In 1988, the EC countries were responsible for two thirds of the world's CFC production.

17. Impact of Trade Restriction: BAN

18. Industry Sector: CHEMical

19. Exporter and Importer: MANY and MANY

E. environment Filters

20. environmental Problem Type: OZONE depletion

This is a problem of ozone loss, which in turn leads to a variety of other problems such as climate change and species loss, including human beings.

21. Name, Type, and Diversity of Species

Name: MANY
Type: MANY
Diversity: Global

22. Resource Impact and Effect: HIGH and SCALE

Without steps to control ozone depletion, this problem might develop rather quickly. Already there is evidence of a worldwide increase in skin cancer rates.

23. Urgency and Lifetime: HIGH and NA

Since practically all species will be affected by the depletion of the ozone layer, it is difficult to estimate the years to extinction.

24. Substitutes: Bio-degradable [BIODG] products

VI. OTHER Factors

25. Culture: NO

26. Trans-Border: YES

Although the problem is not directly a trans-border problem,
the air is clearly trans-border due to air circulation.

27. Rights: NO

28. Relevant Literature

Benedick, Richard Elliot. "Ozone Diplomacy." Issues in Science
and Technology (Fall 1989): 43-50.
Bown, William. "Trade Deals a Blow to the environment." New
Scientist (November 10, 1990): 20-21.
EC Office of Press and Public Affairs. "E.C. Ratifies Convention
on Protecting Ozone Layer." European Community News
27/88 (October 19, 1988).
Economist, "Holed Up," 337/7944, December 9, 1995, 63.
environmental and Energy Study Institute. "EESC Issue Paper."
1991 Members' Briefing Book. Washington, D.C.
European Community. Commission Decision of 15 July 1991
Allocating Import Quotas for Chlorofluorocarbons for
the Period 1 July 1991 to 31 December 1992 91/359/EEC.
Official Journal of the European Communities, No. L193
(17 July 1991): L 193/42-L 193/43.
European Community. Council Regulation (EEC) No 594/91 of 4
March 1991 on Substances that Deplete the Ozone Layer.
Official Journal of the European Communities, No. L67
(March 14, 1991): L67/1 - L67/10.
"Hole-stoppers." Economist (March 7, 1992): 76.
Jachtenfuchs, Markus. "The European Community and the Protection
of the Ozone Layer." Journal of Common Market Studies
XXVIII/3 (March 1990): 261-277.
Kerr, Richard A. "Ozone Destruction Worsens." Science
(April 12, 1991): 204.
Koehler, Jamison and Scott A. Hajost. "The Montreal Protocol: A
Dynamic Agreement for Protecting the Ozone Layer."
Ambio 19/2 (April 1990): 82-86.
Monastersky, R. "Nations to Ban Ozone-Harming Compounds."
Science News 138/7 (July 1990): 6.
Randal, Jonathan C. "Conference Opens on Ozone."
Washington Post (March 6, 1989): A9-A10.
Rosencranz, Armin and Reina Milligan. "CFC Abatement: The Needs
of Developing Countries." Ambio 19/6-7 (October 1990):
312-316.
Shabecoff, Philip. "Accord is Reached to Protect Ozone." New
York Times (September 16, 1987): A11.
United Nations environment Programme. Montreal Protocol on
Substances that Deplete the Ozone Layer. 1987.


References

1. Economist, "Holed Up," 337/7944, December 9, 1995, 63.