POLIS 2122 Global Environmental Politics

Globalisation and the growing interconnectedness of global value chains generate concerns about the impact of trade on the environment. What impact does commerce have on the environment? Moreover, conversely, how may a developing natural environment (for instance, the influence of climate change) affect trading patterns? Is trade liberalisation beneficial or detrimental to the environment? (Nasir, Canh and Lan Le, 2021) Furthermore, what were the short- and long-term implications, and can an ideal mix of trade and environmental Policy maximise economic advantages while reducing environmental costs? The solution is not immediately apparent (Jenkins, 2010).

Importing and exporting commodities, like other types of industry, often has an environmental impact. However, will these impacts be amplified or diminished as trade expands? Will they have an effect on the exporting country, the importing country, or the globe at large? Moreover, who is responsible for resolving environmental issues associated with trade? These are the kind of questions that have garnered more considerable attention. International attention was drawn to these concerns for the first time in 1991 when the Mexican government disputed a United States statute prohibiting the importing of Mexican tuna. The Marine Mammal Protection Act of the United States barred tuna fishing practices that resulted in the death of significant numbers of dolphins and restricted tuna imports from nations that practised such fishing (Carleton, 2011). The Government of Mexico argues that US legislation violates the norms of the General Tariff and Trade Agreement (GATT) (Copeland, 2013).

As per the free trade principles that underpin the GATT and its successors, the World Trade Organization (WTO), governments cannot prohibit imports unless in very restricted circumstances, such as safeguarding their own population's health and safety. A GATT controversy panel decided that the United States could not utilise national law to protect dolphins from its territorial bounds. Although Mexico did not pursue enforcement of the tuna/dolphin judgement, it sparked a considerable dispute over economic and environmental problems. In a similar instance, in 1999, the World Trade Organisation, the US, employing fishing techniques that killed endangered sea turtles, could not ban the importation of shrimp from nations. The ramifications of this and the previous tuna/dolphin ruling might have a significant impact on several other worldwide environmental challenges, including forest conservation, ozone depletion, hazardous waste management, and global climate change. All of these challenges are intertwined with international commerce (Petersmann, 2018).

Debate between Trade and Environment

As is the case with any debate, the trade and environment debate, also has two sides. The first is that trade hinders the environment. This side of the debate is supported by the opponents of globalization, who assert that global trade is detrimental to the environment. However, there are others, which forms our other view of the view, who support the notion that trade actually helps the environment. To check which one is the winning side, the following parts would look into both the side of coins.

Trade helps environment

Increased commerce, on the other hand, contributes to a more crucial capacity to govern the environment more successfully by fostering economic growth, development, and social welfare, all of which are important factors in environmental management. Even more importantly, open markets allow for the introduction of new technologies that improve the efficiency of local industrial processes by lowering the quantity of energy, water, and other environmentally dangerous materials that are consumed (Räthzel and Uzzell, 2013).

Similarly, liberalisation of trade and investment gives enterprises incentives to adhere to stricter environmental norms. As a country's economy grows increasingly connected to the global economy, its export sector is becoming more susceptible to environmental regulations implemented by significant importers. Changes required achieving these standards then trickling back through the supply chain, encouraging the adoption of more environmentally friendly manufacturing techniques and technology.

Even though the globalisation opponents assert that global trade is detrimental to the environment. They argue that in trade openness, a "fight to the lowest" in environmental standards would occur from governments' concern that increased environmental regulation would harm their international competitiveness. In the “Is Trade Environmentally Friendly? Sorting out the Causality (NBER Working Paper No. 9021)” (Levine, 2002), Jeffrey Frankel and Andrew Rose of the National Bureau of Economic Research analyse the environmental consequences of economic openness in a statistical cross-section of nations in 1995. They discover that, for a given level of wealth, the effect of trade on at least three types of air pollution seems to be helpful rather than detrimental. Openness, as assessed by the trade-to-income ratios, tends to help decrease air pollution. Sulphur Dioxide has a high degree of statistical significance, whereas Particulate Matter or Nitrogen Oxides have a moderate degree of significance (NBER, 2021).

The presence of a correlation does not imply that there is a link between the two. The apparent association between commerce and pollution may have other explanations. It is indeed likely that more democratic nations are more open to commerce as well as more sensitive to environmental problems. Additionally, increasing levels of wealth may have a variety of effects on commerce and the environment (NBER, 2021).

One may ask how could a global trade regime possibly be beneficial to the environment? Trade enables nations to achieve a greater variety of objectives, including environmental conservation (the authors has called this a proposition for the gains-from-trade hypothesis). Worldwide trade has resulted in increased international pressure to tighten environmental standards or even in positive technology and managerial breakthroughs. Multinational firms often bring new, state-of-the-art manufacturing processes from nations with better standards to host nations where such requirements are unknown (Harris and Roach, 2018). Additionally, trade economists argue that openness to trade fosters continuous innovation in technological and managerial practices; this innovation is applicable to environmental problems in addition to pure economic purposes. To put it another way, according to Frankel and Rose, environmental progress may be a side effect of globalisation (Brebbia and Miralles i Garcia, 2016).

Even if trade liberalisation does not increase global air pollution, it may lead to the creation of "pollution havens," or nations that specialise in the dirtier industry and sell their goods to nations that specialise in cleaner manufacturing. In this manner, even if the average amount of pollution does not vary, the geographical distribution of contamination may alter. Poorer nations are projected to also have a "comparative advantage" in the environment, according to one variant of the pollution haven theory. However, Frankel and Rose put the theory to the test, finding no evidence that the combining of poverty and openness leads to increased pollution levels. They may also dismiss variations of the pollution haven theory that claim that low-density and capital-intensive economies enjoy a comparative pollution advantage (Brebbia and Miralles i Garcia, 2016).

The "Environmental Kuznets Curve" for the three dimensions of air pollution is also documented by the authors for the three measurements of air pollution (Pettinger, 2019). According to this well-established link, growth is harmful to the environment at low levels of wealth but beneficial at high ones. Higher levels of per capita income promote public demand for better environmental quality, which is achieved in democratic nations via environmental legislation. According to Frankel and Rose, SO2 emissions peaks at $5,770 per capita income and then begins to fall. All of this fits with economic theories, which imply that although industrialisation leads to increased air and water pollution, it ultimately results in less pollution as nations become rich enough to fund environmental clean-up. To put it another way, production technology continuously pollutes, while growing wealth as a consequence of this same production technology always raises demand on environmental quality (Mutuku, 2018).

Globalisation is beneficial for growth, according to a final result drawn from trade and income research. As per Jeffrey Frankel and Andrew Rose, every .01 rise in the trade-to-GDP ratio results in a 0.4 per cent rise in revenue over the next two decades (NBER, 2021). The impacts of trade that operate via growth — increasing pollution for a while and then lowering pollution later — may be more significant than the impacts of trade that operate without development.

Trade hinders environment

Economic development brought about by trade development has a direct effect on the environment through increasing pollution and deteriorating natural resources. As a result of the variations in environmental regulatory stringency between nations, the so-called 'pollution haven theory', trade liberalization simply translates into specialisation in pollution-intensive businesses in certain nations (Wu and Salzman, 2014). The growing pollution, across the globe, by the mining, telecom and automotive industry are just the examples of the manner, where the profit-maximization has led to the environment being hindered in a grave manner. The need to earn profits, has blinded the industries, and they rampantly misuse the environmental resources, which is why the present pollution levels, across the globe, and in labor intensive countries like China and India, remain at a high level.

Although there are various regimes and frameworks applicable globally, that are meant to protect the environment, the overall results of it have not been fruitful. This can be proven through a discussion on the Sustainable Development Goals (SDGs) and the history of WTO. The passion and commitment around the trade-environment nexus come at a critical time for the SDGs. Some of the trade-related SDG objectives, such as SDG 14.6 tied to a WTO Agreement on punishing harmful fishing subsidies, are now confronting a 2020 deadline for implementation, five years just after Goals were approved by the world's governments. With less than a decade left to implement the 2030 Agenda for Sustainable Development – with doubts hanging over the SDGs' critical objectives with a 2020 timeframe – it is worth examining some of the backgrounds of the trade and environment issue and analysing where things are now (IISD, 2020).

When the World Trade Organization (WTO) was established in January 1995, the Marrakesh Agreement contained a reference of sustainable development as a goal in its preamble. Simultaneously, numerous agreements within the general rulebook made reference to environmental goals and anticipated scenarios in which nations would need to break from global trade norms in order to conserve natural resources in particular circumstances.

These more recent sections have now been submitted to a range of alternative challenges via the WTO's dispute settlement process, with prominent cases being the "shrimp-turtle" issue. This included a US import prohibition on shrimp harvested in methods that might jeopardise protected sea turtles, and a long-running conflict between the US and Mexico about Washington's "dolphin-safe" tuna labelling procedures and the consequent trade restrictions. In other WTO disputes, the legitimacy of local content criteria, including renewable energy project subsidies, was challenged. Animal welfare was the subject of two separate lawsuits over whether it regarded as a "public morals" exemption that could be used under WTO regulations (DS400 and DS401) (Arden Clarke, 2017). In fact, it may be challenging to make use of certain of the trade law's environmental exclusions. Several issues have been raised throughout the years, including whether the actions used were required to accomplish their stated goal and if they resulted in unjustified discrimination between nations.

Questions have also been raised about the possibility of inconsistency between the Organization's rulebook and also the multiple Multilateral Environmental Accords (MEAs) concluded under different venues, which cover anything from hazardous waste transportation or disposal to tropical wood trading (Bang, Hovi and Sprinz, 2012). As per the WTO, over two dozen of those spell forth concrete trade policies for achieving the MEA's goals. For several years, the World Trade Organization (WTO) was engaged in active talks to address some of the early issues that the trading system encountered in guaranteeing conformity with these MEAs as well as their own trade-related rules. The goal of these talks was to figure out ways to get more people involved across the secretariats. Environmental talks at the WTO also included a market access component, in which states sought to decrease or abolish tariffs and non-tariff barriers against environmental products and services (Bang, Hovi and Sprinz, 2012).

In 2001, as one of the much broader Doha Round of trade discussions, the Doha Ministerial Declaration predicted future debates on more environmental concerns, including the effects of various environmental actions on market access. This is especially true for developing nations and least developed countries (LDCs), as well as re-examining the WTO's intellectual property standards in light of environmental concerns and the importance of environmentally friendly labelling (Wilkinson, Hannah and Scott, 2014). Whether these additional themes become negotiating agenda issues was up to the regular Committee for Trade and Environment that had four years from either the start of these efforts in 2001 to suggest negotiations. Finally, these issues were not included in the negotiation agenda.

The aforementioned Doha Round sought to reform the WTO's rules in order to solve a number of issues that had become evident during the institution's early years, most notably its development-related imbalances. Since then, the Doha Round has essentially stopped, with perhaps the exception of a few remaining discussion issues, notably fisheries subsidies, which are being addressed by the Rules Negotiating Group. The WTO's other environment-related discussions were likewise hampered by the deadlock; however, many of the concepts articulated there have subsequently influenced advancements in other global and domestic processes (Wilkinson, Hannah and Scott, 2016).

In an effort to reduce tariffs on environmental goods, the Asia-Pacific Economic Cooperation (APEC) conference made a non-binding promise to establish a list of items with tariffs of 5% or less. Shortly afterwards, many WTO members began negotiating an Environmental Goods Agreement (EGA) to reduce tariffs on a specific list of items, with the goal of extending the advantages to the WTO's entire membership. However, the whole process has been halted since late 2016 (Efstathopoulos and Kelly, 2014). This was meant to ensure that the problems associated trade, in terms of environment, were resolved through proper manner, so as to get the best of both worlds. At the same time, governments have worked via regional trade agreements for decades to strengthen economic relations (RTAs). Many of them anyway feature specialised parts on environmental issues, many of which may be resolved in part or in whole. In some RTAs, the Paris Climate Agreement is also referred to as an important objective (Martin and Mercurio, 2017).

Nonetheless, some of the environmental issues voiced during the WTO's early years linger, and certain have proved especially challenging to overcome. Environmental and economic objectives are often represented politically as requiring unpleasant trade-offs – given the high body of evidence proving that sustainable development is also not a privilege but a necessity. With the rise of new global trade agreements, governance frameworks in recent years, including the increasing website of regional trade agreements as well as the Paris Agreement, and increasing involvement of a number of WTO members in these talks, that provides a welcome opportunity to revitalise the business environment.

Road Ahead

Today, far too often, global trade fuels already unmanageable levels of resource use, waste production, and disposal, all of which contribute to rising greenhouse gas emissions, pollution, or biodiversity loss. For instance, emissions from the transportation sector, which is the bedrock of international commerce, are quickly increasing. It is the third greatest source of greenhouse gas emissions in Australia (96MtCO2e per year, or 17% of total emissions). Transportation emissions have increased at a faster rate than any other industry, approximately 60 percent since 1990 (Australian Government, 2017). Automobiles account for nearly half of all transportation-related emissions. Australian automobiles together release nearly the same amount of carbon dioxide per year (43MtCO2e) as Queensland's total coal and gas-fired energy generation.

Nevertheless, recent catastrophic weather calamities such as floods and storms have highlighted the fragility of the supply, transportation, and distribution systems that support contemporary commerce. These occurrences, together with natural catastrophes, failure to prevent or adapt to climate change, as well as water crises, are ranked in the top risks for the next ten years in terms of perceived effect.

To counteract these trends, trade as well as environmental governance must complement one another and build resilience. All this may serve as a catalyst for promoting good behaviours, sustainable production as well as consumption, environmental investments, as well as the development of green technology. Indeed, a combination of actions targeted at mitigating climate change or stimulating investment in low-emission climatic conditions infrastructure might increase the average economic production of G20 countries by up to 2.8 percent by 2050. Coherent trade and environmental policies may also assist emerging nations in integrating into green global value chains with open markets.

Trade cannot be seen as a goal in itself. Trade must be the engine that propels a brighter, greener and much more inclusive world. The combined approach with the World Trade Organization has the potential to make this vision a reality.

To provide universal access to green products, countries need trade practices that enhance new solutions and decrease tariff and non-tariff obstacles to their import and export. They must eliminate red tape and other impediments to the trade of sustainable products and services, exceptionally environmentally friendly technology. Additionally, we need trade rules that link sustainable production and consumption and foster a more significant change that enables consumers to make more informed choices.

Conclusion

On the basis of above discussion, one can conclude that the debate between trade and environment is an old one, which continues to be present in the present day and age. The discussion was meant to explore whether the global trade regime helps or hinders the problems associated with global environment. Free trade means obtaining a free trade concession from the world's environmentalists. The structure of global commerce, as well as its sheer volume, ensures that the environment takes responsibility every time. However, the global environment is limited, and rising global commerce depletes the Earth's natural capital, which we cannot reinvest in. It is indeed gone for all time once this is gone. Global commerce sorely needs the effect it is exerting on the global ecology to awake our eyes and ears. However, a careful analysis, particularly to cases like shrimp case, shows the trade hampers environment.

References

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