Trade and the environment Trade liberalisation Specialization Income Growth Technology Transport Environmental policy 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 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
Core problems in current WTO legislation l l 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 l Tuna-Dolphin l Shrimp-Turtle l Beef hormone l Asbestos
Core issues in the WTO negotiations l l Environmental standards and labels – green protectionism Subsidies – double-win Environmental goods and services – triple-win Multilateral environmental agreements and the WTO – conflict or cooperation Average tariff levels for environmental goods (in ad valorem percentage terms) Applied MFN Bound End UR Canada, EU, Japan, US 2. 1 2. 7 Korea, Mexico, Turkey 8. 2 22. 4 Czech and Slovak Republic, Hungary, Poland 7. 4 7. 0 11. 2 29. 2 China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, Taiwan, Thailand, Vietnam 9. 7 35. 9 Estonia, Latvia, Lithuania, Romania, Russian Federation, Slovenia, Ukraine 5. 1 36. 0 Argentina, Brazil, Chile, Venezuela Source: OECD (2002), Average tariff levels for environmental goods http: //www. oecd. org/dataoecd/50/12/2484545. pdf
Conclusion: Trade and the environment l No clear link between openness and the state of the environment - depends on the state of environmental policies, regulations and institutions l Trade may amplify the state of the environment. l In some cases trade measures are needed, But trade policies are second- or third-best options and may divert attention from appropriate environmental policies l Avoiding trade measures may inspire international measures l Trade liberalisation and environmental policies must go hand in hand l A more nuanced debate on environmental labels l Clear win-win situations for subsidies and environmental goods and services l 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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