South-Western College Publishing - Economics  

Policy Debate: Does international trade harm the environment?


Issues and Background

The WTO may have been great for free trade, but as far as animals are concerned, the WTO is the single most destructive international organization ever formed. WTO rulings can reach any animal, anywhere, and at any time. Nothing is sacred in the eyes of the WTO, so regulations on handling, slaughtering, and care of animals as well as those governing trapping, pollution, and habitat destruction are all fair game. And whenever a nation has challenged an animal protection regulation, the WTO has ruled that regulation to be an illegal trade barrier. The nation that has enacted the offending rules must either change its law or pay a heavy financial penalty. The nation usually prefers to change the law.
~Humane Society of the United States, 2001


One reason why environmental protection is lagging in many countries is low incomes. Countries that live on the margin may simply not be able to afford to set aside resources for pollution abatement, nor may they think that they should sacrifice their growth prospects to help solve global pollution problems that in large part have been caused by the consuming life style of richer countries. If poverty is at the core of the problem, economic growth will be part of the solution, to the extent that it allows countries to shift gear from more immediate concerns to long run sustainability issues. Indeed, at least some empirical evidence suggests that pollution increases at the early stages of development but decreases after a certain income level has been reached.... [T]rade is one cylinder that propels the engine of growth.


The volume of international trade has increased dramatically over the past 25 years. Much of this increase has been the result of international agreements that have reduced trade barriers. Economists have generally argued that free international trade benefits all participants by allowing countries to acquire goods and services at a lower opportunity cost. In recent years, however, there have been increasing concerns over the effect of international trade on the global environment. Protests over environmental issues have disrupted recent meetings of the World Trade Organization (WTO).

Economic growth requires the use of increased quantities of energy and natural resources. This increase in resource use and production often results in adverse environmental consequences. While developed economies have imposed relatively stringent environmental protection laws, less developed economies generally have only limited regulations concerning the protection of the environment.

Many environmental groups argue that unrestricted competition across countries results in production being shifted to those countries with the least restrictive environmental restrictions since these countries experience lower production costs. Furthermore, they suggest that the removal of trade barriers makes it more difficult for countries to enact environmental protection laws that will reduce their ability to compete in international markets.

Industrialized nations have passed laws designed to protect endangered species. Some of these laws ban the sale of output that is produced in a manner that harms endangered species. The U.S., for example, passed laws banning the sale of shrimp that were caught in nets that were not modified to protect sea turtles. When other countries protested that this ban interfered with their ability to sell shrimp to the U.S., the WTO initially forced the U.S. to reverse this ban (a revised U.S. ban on imported shrimp was upheld by a disputes settlement board of the WTO on June 15, 2001). In a similar case, the U.S. banned imported tuna from Mexico due to the use of fishing techniques in Mexico that also killed dolphins. The WTO overturned this ban because of its adverse effect on trade. It is argued that this type of interference from the WTO will discourage countries from passing laws designed to protect endangered species.

Advocates of free trade, however, note that the demand for environmental protection rises as countries develop. Individuals who are hungry tend to be more concerned about where their next meal is coming from than about air and water quality. Since free international trade is expected to encourage economic development, it is argued that international trade encourages increased environmental protection.

Those who support free trade also observe that increased trade is often accompanied by increased foreign direct investment. Since foreign direct investment generally involves a technology transfer from developed to less developed economies, developing economies usually adopt the relatively "cleaner" production methods in use in developed economies. This argument suggests that free trade encourages the adoption of more environmentally sound production processes in developing economies.


Primary Resources and Data

  • World Trade Organization
    The World Trade Organization (WTO) is charged with enforcing international trade agreements. This web site contains information on the history of the WTO, statistics on international trade, and a discussion of studies and reports on issues currently investigated by the WTO.

  • Trade and Environment Database
    The Trade and Environment Database provides information about cases involving conflicts between international trade and environmental protection. The cases are searchable by a variety of criteria and are also sorted by environmental issue.

  • United Nations Environmental Programme (UNEP)
    The United Nations Environmental Programme provides information on international programs and treaties designed to protect endangered species and the environment.

  • Center for International Earth Science Information Network (CIESIN), "Environmental Treaties and Resource Indicators (ENTRI)"
    This web site contains links to the text of international treaties concerning the environment. Documents are sorted by "issue area." Searches may be conducted using a list of key concepts. Full-text search of the treaties is also available.

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora
    This web site provides information about the international treaty that bans international trade in endangered species. The full text of the Convention on International Trade in Endangered Species of Wild Fauna and Flora is available at this site.

  • Office of the United States Trade Representative, "2006 Trade Policy Agenda & 2005 Annual Report of the President of the United States on the Trade Agreements Program"
    This document contains detailed information on the state of U.S. international trade, including an extensive collection of trade statistics. Information on the status of treaty negotiations and trade disputes is provided. (The Adobe Acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.)

  • CUTS Centre for International Trade, Economics & Environment
    The CUTS Centre for International Trade, Economics & Environment conducts research on sustainable development and the economic and environmental impacts of international trade. Links to online documents and reports are available at this site.

  • EnviroLink Network
    This web site contains links to a wide variety of material related to environmental issues. An extensive collection of links is provided.

  • International Centre for Trade and Sustainable Development, "Non-Governmental Organisations Involved in International Trade & Sustainable Development "
    This web site, provided by the International Centre for Trade and Sustainable Development, contains links to the web sites of an extensive collection of non-governmental organizations that are concerned with issues involving trade and development.

  • Timothy C. Weiskel, "International Trade Agreements and the Environment - The Case of NAFTA"
    This web page, created in 1997) contains an extensive bibliography of books that deal with the effects of the North American Free Trade Agreement (NAFTA) on the environment.


Different Perspectives in the Debate
  • Humane Society of the United States, "World Trade Organization/Free Trade Agreements (FTAs)"
    This document, provided by the Humane Society of the United States describes concerns about the effect of the WTO and Free Trade Agreements on attempts to protect animals from inhumane treatment. They observe that the Humane Society and other environmental and animal rights groups have become more active in participating in the creation of trade agreements.

  • Friends of the Earth International
    Friends of the Earth International is a federation of environmental groups. This web site contains a collection of documents that address their concerns about international trade, the environment, and sustainable development. Some of the more relevant documents may be found from links on their Trade, Environment and Sustainability Campaign page. In these documents, it is argued that the current trading system is not democratic and places corporate interests above those of citizens.

  • Friends of the Earth - U.S.
    The United States Friends of the Earth organization provides additional statements of concern about the adverse environmental consequences of trade in documents posted on this web site. Of particular interest are the documents available from links on their web pages entitled: It is argued that international trade has resulted in deforestation, increased risk of disappearing species, and global warming.

  • Greenpeace, USA, "Safe Trade in the 21st Century"
    This web site contains information about Greenpeace's views on the WTO and international trade. It is argued that trade agreements should include more provision for environmental protection. Specific examples of policy issues are provided in this document. (The Adobe Acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.)

  • Public Citizen Global Trade Watch, "World Trade Organization"
    This organization, sponsored by Ralph Nader, argues that the WTO places endangered species at risk and harms the global environment. Links to news stories on these issues are provided at this site. Among the materials available on this site is "A Citizen's Guide to the World Trade Organization," a document that summarizes arguments (including environmental arguments) against the WTO. (The Adobe Acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.)

  • Sierra Club of Canada, "Groups Condemn Latest Blow to Environmental Protection at the Hands of NAFTA"
    In this November 2000 Press Release, the Sierra Club of Canada discusses the adverse environmental consequences associated with NAFTA. In particular, they express their concern over the implications of a decision that overturned a Canadian ban on the export of hazardous PCB waste.

  • Global Exchange, "Top Ten Reasons to Oppose the Free Trade Area of the Americas"
    On this website, Global Exchange provides a list of reasons for their opposition to the Free Trade Area of the Americas on this website. (Three of the ten arguments provided involved environmental issues.)

  • Global Exchange, "Free Trade, the Environment, and Biotech"
    Global Exchange provides additional arguments against the Free Trade Area of the Americas on this website. It is argued that this agreement would limit the ability of member countries to engage in environmental protection. Particular concern is expressed over trade in genetically engineered crops.

  • Fred L. Smith, "Free Trade for All",01318.cfm
    Fred L. Smith argues that free trade benefits the environment by increasing national wealth. He notes that there is substantial evidence indicating that wealthier nations are more likely to introduce and enforce environmental protection laws.

  • Global Environment and Trade Study
    The Global Environment and Trade Study is a collaborative effort by The Yale Center for Environmental Law and Policy and the Institute for Agriculture and Trade Policy. This web site contains a collection of online reports and studies on the environmental impacts of international trade and economic development. A listing of studies by environmental issue is available at this site.

  • Daniel Seligman, "How NAFTA Expansion Would Undermine Protection"
    In this online February 2001 article, Daniel Seligman expresses a number of concerns over the proposed Free Trade Area of the Americas (FTAA). He argues that this treaty would result in adverse environmental effects. It is suggested that, under this treaty, developing countries would be especially vulnerable to lawsuits from firms that were harmed by environmental protection laws.

  • WTO, "Trade and Environment"
    This website, provided by the WTO, contains links to a variety of WTO documents and studies that investigate the effects of free trade on environmental quality. Documents on this site describe the evolution of WTO environmental policy and examine the environmental provisions in existing trade agreements.

  • WTO, "Trade and Environment"
    This 1999 WTO study examines the impact of international trade on the environment. It is argued that trade barriers are not effective tools in dealing with environmental problems. This study suggests that environmental problems may be more effectively controlled by dealing with the externality or common property resource problems that are their ultimate cause. It is also argued that environmental regulations have little impact on firm profitability, so it is unlikely that firms will relocate production in other countries in an attempt to avoid regulation. (The Adobe Acrobat viewer plugin is required to view this document. You may download this viewer by clicking here.) A summary version of this rather lengthy report is also available.

  • Ana I. Eiras and Brett D. Schaefer, "Trade: The Best Way to Protect the Environment"
    In this September 27, 2001 Heritage Foundation article, Ana I. Eiras and Brett D. Schaefer argue that international trade protects the environment by encouraging trade and economic growth. They note that wealthier countries display greater concern over environmental issues. Trade agreements, by increasing incomes in less developed countries will, in this view, increase environmental protection.

  • Paul M. Orbuch and Thomas O. Singer, "International Trade, the Environment, and the States: An Evolving State-Federal Relationship"
    This 1995 article, appearing in the Journal of Environment and Development, describes the effect of trade agreements on state regulations. It is noted that both the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Treaty (NAFTA) restrict the ability of states to engage in environmental regulations that affect trade. It is recommended that states be given greater say in the construction of such treaties since these treaties bind the states as well as the federal government.

  • WTO, "High Level Symposium on Trade and Environment"
    This website contains archived links to a summary of the speeches delivered at the March 15-16, 1999 WTO Symposium on Trade and the Environment.

  • World Bank Policy Research Bulletin, "International Trade and the Environment"
    This January/February 1993 research bulletin addresses the effect of international trade on the environment. This study cites evidence that suggests that pollution per capita appears to fall as income rises for at least some pollutants. It is also noted that developing countries with liberal trade policies have generated less pollution than those developing countries that pursue restrictive trade policies. This document also suggests that pollution abatement costs have little effect on international competitiveness since these costs are a very small fraction of production costs.

  • Laura Williamson, "International Trade and the Environment"
    Laura Williamson examines the effect of international trade agreements on the environment in this article appearing in the January 2000 issue of Conscious Choice. She argues that these trade agreements have the potential for increased environmental harm by limiting the ability of nations to regulate adverse environmental impacts. Williamson provides a useful description of the provisions that affect environmental regulation in each of the major trade agreements. She raises concerns over the problems in:
    • regulating product safety,
    • protecting the environment from invasive species,
    • protecting endangered species,
    • allowing states to introduce environmental labeling and certification laws,
    • maintaining clean air,
    • preventing clear-cutting in forests,
    • restricting the transportation of hazardous wastes, and
    • using government procurement laws and practices to encourage environmentally sound production methods.
    Williamson notes, though, that international treaties also provide a mechanism for improving the global environment. She suggests that environmental protection requirements should be a feature of future international trade agreements.

  • Kevin P. Gallagher and Robin Taylor, "International Trade and Air Pollution: The Economic Costs of Air Emissions from Waterborne Commerce Vessels in the United States"
    In this September 2003 working paper, Kevin P. Gallagher and Robin Taylor discuss the environmental cost of air pollution resulting from cargo ships. During the period from 1993 to 2001, they estimate the annual cost of sulfur dioxide emissions at $126 million. NOx emissions are estimated to cause $412 million in economic damages per year. Gallagher and Taylor suggest that 40% of these sulfur dioxide and 35% of the NOx emissions are the result of increased trade caused by the Uruguay Round.

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