International Trade and the EnvironmentSlide 2Slide 3Slide 4Slide 5International Trade and the EnvironmentSlide 7Slide 8EEP153, spring 2005International Trade and the EnvironmentRevisit Env. Kuznets Curve (Arrow et al) Will economic growth ensure improved environmental quality and ecosystem resilience? Is growth in international trade (imports & exports) good or bad for the environment? (UNEP)Is growth in international trade good or bad for GNP growth? Per capita growth? Reducing inequality and poverty? (Oxfam)EEP153, spring 2005International Trade and the Environment“The solution to environmental degradation lies in such institutional reforms as would compel private users of environmental resources to take account of the social costs of their actions.” (inverted U-shape shows has happened in some cases)“If human activities are to be sustainable, we need to ensure that the ecological systems on which our economies depend are resilient. The problem involved in devising environmental policies is to ensure that resilience is maintained, even though the limits on the nature and scale of economic activities thus required are necessarily uncertain.”“…it is necessary that we act in a precautionary way so as to maintain the diversity and resilience of ecosystems.”Arrow et alEEP153, spring 2005International Trade and the EnvironmentBasic slide on WTO functions and principle– Committee on Trade and EnvironmentEEP153, spring 2005International Trade and the EnvironmentSlide showing different perspectivesTradeEnvironmentDevelopmentEEP153, spring 2005International Trade and the EnvironmentThe tuna-dolphin dispute (1991), shrimp-turtle dispute (1998)What was it all about?In eastern tropical areas of the Pacific Ocean, schools of yellowfin tuna often swim beneath schools of dolphins. When tuna is harvested with purse seine nets, dolphins are trapped in the nets. They often die unless they are released.The US Marine Mammal Protection Act sets dolphin protection standards for the domestic American fishing fleet and for countries whose fishing boats catch yellowfin tuna in that part of the Pacific Ocean. If a country exporting tuna to the US cannot prove to US authorities that it meets the dolphin protection standards set out in US law, the US government must embargo all imports of the fish from that country. In this dispute, Mexico was the exporting country concerned. Its exports of tuna to the US were banned. Mexico complained in 1991 under the GATT dispute settlement procedure.The panelThe panel reported to GATT members in September 1991. It concluded:that the US could not embargo imports of tuna products from Mexico simply because Mexican regulations on the way tuna was produced did not satisfy US regulations. (But the US could apply its regulations on the quality or content of the tuna imported.) This has become known as a “product” versus “process” issue.that GATT rules did not allow one country to take trade action for the purpose of attempting to enforce its own domestic laws in another country — even to protect animal health or exhaustible natural resources. The term used here is “extra-territoriality”.Similar, but “evolved” conclusions in the shrimp-turtle case.EEP153, spring 2005International Trade and the EnvironmentPotential environmental benefits and harm from international trade:Benefits:Theory of comparative advantage – export what you produce efficiently and import what you produce inefficiently (unsustainably). Food security not self-sufficiency. Could save land, forests, water, minerals.Pressures from importers (e.g. Japan, USA, Europe) could influence exporters to adopt more environmentally sound practices, e.g. eliminate use of banned pesticides, adopt practices for green labeling – coffee).Others…Harm:Increased fossil fuel emissions from transportation of goods around the world (e.g. “buy local and seasonal” vs. buy global).Export opportunities foster unsustainable resource-capture practices for growth and profit, protected under free trade and non-discriminatory WTO provisions (e.g. Canadian timber, Vietnamese shrimp/coffee, sea turtles/shrimp, dolphins/tuna).Above - applied to manufacturing sector leads to growth of polluting factories producing at lowest cost for export, and shifting of factory locations to countries with lower env. standards or poor enforcement (e.g. shoes, textiles, electronics).Others….EEP153, spring 2005International Trade and the EnvironmentTrade, growth and poverty (Oxfam article):Trade typically increases average growth rates, but because of unequal participation/impacts of trade, often worsens inequality.Oxfam article shows that fast-paced liberalization under IMF//WB pressures (loan conditionality) is associated with worsening inequality (gini coefficients) and poverty.East Asia “liberalized” slowly – 1st protected industries & built up infrastructure/education, then export promotion, and subsequently slowly liberalized imports with conditions (tariffs, quotas, domestic content).Trade benefits sectors that can take advantage of economic opportunities/comparative advantage, e.g. farmers/agribusiness with access to credit and markets, semi-skilled factory workers, skilled professionals (out-sourcing), business.Trade hurts small farmers or workers in traditional industries that cannot compete with cheap imports (e.g Mexico, Peru, Haiti, Zambia, India).EEP153, spring 2005International Trade and the EnvironmentEarthJustice Legal Defense Fund, The Case for Rethinking the WTOWhen nations entered into the WTO, they agreed to be bound by its voluminous sets of rules. These rules prohibit discrimination against foreign products and bar import restrictions. While the WTO has exceptions for measures intended to conserve exhaustible natural resources or to protect human and animal health, the exceptions are riddled with so many conditions that it is extremely difficult for domestic regulations to pass muster.That is why the environmental community is calling for reform of both the WTO’s rules and the process by which it makes its decision. At a minimum, the WTO should be reformed to protect:The right to restrict trade to curb harmful environmental and healtheffects, including such effects in the areas of logging, fishing, andmanufacturing.The right to use the precautionary principle to protect people andthe environment against risks.The public right to access