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Trade and the environment

Trade liberalisation. The environment. Trade and the environment. Pollution-havens Weak evidence, except for some industries. Environmental Kuznets curve? Pollution differs amongst equally rich countries Environmental problems must be internalized

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Trade and the environment

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  1. Trade liberalisation The environment Trade and the environment Pollution-havens Weak evidence, except for some industries Environmental Kuznets curve? Pollution differs amongst equally rich countries Environmental problems must be internalized Uncertain trade → growth link. Institutions Specialization Income Growth Technology Transport Environmental policy Transfer of technology Spill-over from preferences, policies and standards in rich countries More transportation – energy, alien species Less transportation – distance, lower subsidies, less tariff escalation “Race to the bottom”/”chilling effect” Competitiveness, harmonisation Political effect of free trade Source: Bach (2004): International Trade, Development Aid. and the Multilateral Environmental Agreements, Paper prepared for the Danish Ministry of Foreign Affairs, March 2004

  2. Core problems in current WTO legislation • Non-discrimination - ”like products” • Production and Processing Methods (PPMs) • Least-Trade distortive • Environmental exception - GATT article XX Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: “... (b) necessary to protect human, animal or plant life or health; “... (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; ...” Core disputes • Tuna-Dolphin • Shrimp-Turtle • Beef hormone • Asbestos

  3. Core issues in the WTO negotiations • Environmental standards and labels – green protectionism • Subsidies – double-win • Environmental goods and services – triple-win • Multilateral environmental agreements and the WTO – conflict or cooperation Source: OECD (2002), Average tariff levels for environmental goods http://www.oecd.org/dataoecd/50/12/2484545.pdf

  4. Conclusion: Trade and the environment • No clear link between openness and the state of the environment - depends on the state of environmental policies, regulations and institutions • Trade may amplify the state of the environment. • In some cases trade measures are needed, But trade policies are second- or third-best options and may divert attention from appropriate environmental policies • Avoiding trade measures may inspire international measures • Trade liberalisation and environmental policies must go hand in hand • A more nuanced debate on environmental labels • Clear win-win situations for subsidies and environmental goods and services • The dramatic clash between MEAs and the WTO has not appeared but some problems remain Source: Bach (2004): International Trade, Development Aid. and the Multilateral Environmental Agreements, Paper prepared for the Ministry of Foreign Affairs in Denmark, March 2004

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