The international economy has experienced a significant initiative to merge markets for the last few decades and this in turn has formed many bilateral, multilateral as well as regional trade agreements. This incorporation of markets from different countries has led the international trade to grow further across the world. Those international agreements theoretically have considered the environmental factors and consequently intend to minimize the effect of international trade on the environment and try to resolve existing problems of environment as well. Hence, this phenomenon has driven policy makers of different countries to conduct various multidisciplinary research as well as policy implementation to overcome issues relating with environment and international trade (Kolk, 2016). Trade is referred as “engine of growth” of both developed and developing countries and after globalisation, almost every country transacts goods and services with each other. Moreover, climate change also creates an international problem and to reduce this, the governments of many countries lead business sectors to produce eco-friendly products (Dean, 2017). The requirement for changing the system of international trade has been discussed in many international conferences though these summits have remained unable to reduce the global warming and higher amount of carbon emission in both eastern and western countries.
Hence, this report has focused to analyse the relationship between international trade and the environment through discussing about the impact of this economic activity on international trade along with the impact of trade liberalisation on environment, the agenda of sustainable development along with the usage of trade agreements for protecting the environment, based on a country.
Production as well as international trade affects the global environment in both positive and negative way. To understand this situation more precisely it is essential to observe free trade agreements through which a country can eliminate restrictions on imports and stimulate international trade activity. Environmentalists have predicted that international trade can weaken the national standard of environment if international trade agreements have remained unable to impose these standards on imported products (Holladay, Mohsin & Pradhan, 2018). Free trade influences a country to allocate resources more efficiently, environmentally and economically. Previous models related to international trade has represented that consumption of local products does not work more environment-friendly than purchasing products from aboard. For instance, New Zealand produces sheep meat, dairy and other horticulture products to export in the U.K markets. Increasing trade can assist economic growth, development along with social welfare, which in turn can manage the economy more accurately. Based on previous studies, it is observed that air pollution increased due to higher amount of carbon emissions when a country shifted from a low per-capita state to middle per-capita one. However, this pollution level started to reduce when this country started to attain higher per-capita income (Costantini, Crespi, Marin & Paglialunga, 2017). In addition to this, many developing countries have also started to adopt comparatively tougher policies to control pollution than that of OECD countries during same development levels. Through understanding the links between health improvement, increase productivity and pollution reduction, many developing countries have stated that controlling pollution has higher benefit compare to its costs of production.
To sustain environment in a stable condition, companies in developing countries have started to address pollution by considering the utilities of pollution charges or taxes. Through applying this technique, Indonesia and Philippines have successfully reduced the pollution level. In addition to this, countries can create industrial parks for building heavy industries like steel and chemicals, which obtain materials recovery at higher level, recycling along with waste treatment. In this context, it can be mentioned that economic openness regarding investment and trade can assist a country to adopt higher incentive along with improved access in new environmental technologies. When a country incorporates in the international economy, its exports activities become familiar in international market and consequently the country needs to follow restrictions imposed by leading importers (Yan, Yi, Du & Yang, 2017). For meeting these trade related requirements, these exporting countries change their production and trading pattern that can further stimulate these companies to use comparatively cleaner processes of production and technologies. Some previous adoption regarding environmental regulations have helped the world economy through adopting regional and bilateral agreements between developing and developed countries where trade agreements encourage comparatively less developed countries to strengthen their environmental regulations along with resources and information to exchange (Sun, Tariq, Kong, Khan & Geng, 2018). In this context, impact of trade liberalisation can be discussed on various economic segments.
Carbon print on free trade:
According to an article of the Global Development and Environment Institute (GDAE), free trade increases the level of carbon emission through transportation, chiefly when the country exports goods to foreign markets (Zubedi et al., 2018). The chief goal of trade liberalisation is to increase total production across the world and consequently 2008 report of the GDAE recognised that total pollution level as well as negative effects on environment also increased accordingly.
Free trade influences agricultural sectors of exporting countries from different aspects. For instance, corporate firms increase pesticide usage for producing higher amount of agricultural products so that they can export higher amount of agro-based products to foreign countries. This procedure further increases productivity capacity of marginal lands and heavy use of pesticides causes air, soil and water pollution (Martin, 2018). However, cultivation evolution of some crops to export with better quality has led positively affected environment. For instance, farmers of Latin America and Africa have replaced domestic crops with cocoa, coffee and other tree crops, as this process can reduce soil erosion. In addition to this, Kenya has also adopted some modern and scientific technique to reduce environmental eradication. The country has increased horticulture production to grow flowers with high quality to export in Europe (Li & Beghin, 2017). However, flowers have also affects environment adversely due to excessive use of pesticide. Moreover, this country exports flowers through jet, which intakes more energy. The GDAE has noted that energy used in Kenya for cultivating and exporting flowers is comparatively low than energy required to grow flowers in heated green houses of Europe.
Race to the Bottom:
Free trade leads countries to export pollution to importing countries, as production plants moves to those countries with comparatively cheaper workforce and low standard of environment. In a report of the Globalisation Council, published in 2009, increasing large-scale production has brought a “race to the bottom” for regulating national environment (Kiefer & Rada, 2014). It is assumed that new production technique can facilitate a country to bring clear environment with modern technology and innovative production process.
Sustainable development is the process of development that intends to meet the requirements of the present generation without compromising the chances of future generations to fulfil their needs. The main concept of sustainable development can be of different types though the chief focus of this approach to improve the difference between balance, requirements against an environmental awareness considering both social and economic barriers that a society experiences (Carley & Christie, 2017). Without considering the impact of future, only a particular requirement leads the economy to develop further. The WTO chiefly focuses on preservation and protection of the environment and these activities are included in the Marrakesh Agreement. This agreement helps the WTO to fulfil its objectives for declining trade barriers along with eliminating of discriminatory treatment based on international trade relations. For obtaining sustainable development, no such agreement has been generated, though the WTO members have adopted some measures related to trade, focusing on environment protection (Zhan et al., 2018). This protectionism provides various conditions to restrict the misuse of natural resources. The WTO provides environment protection along with preservation through trade openness, rules and mechanism of enforcement with the help of different WTO bodies and some efforts of the Doha Development Agenda.
In December 2015, the 10th Ministerial Conference of the WTO was held where WTO members agreed various important issues taken in the Doha Development Agenda and consequently framed the future negotiations of these agreements. This Doha Round of the WTO, known as the Doha Development Agenda, was launched in Doha, 2001 (Wto.org, 2018). This agenda targeted to liberalise trade for making it easier for developing countries. Especially, Least Developed Countries (LDC) integrated successfully into the multilateral system of the WTO (Farsund, Daugbjerg & Langhelle, 2015). The chief objectives of this agenda were to reform agricultural subsidies, confirming that new liberalisation in world economy considers the requirement for sustainable economic growth for developing countries and improving access in international markets of developing countries for exporting their products.
To promote sustainable development in international market, the European Union has taken various steps to incorporate environmental concerns with its external relations along with trade policies. Special emphasis has been given on environmental issues to develop stronger international co-operation with the help of an enlarging system of United Nations and to find a great balance between agreements related to multilateral environment and liberalised trade rules. The EU has set up strategies on sustainable development with a long-term vision for sustain where economic growth, environmental protection and social cohesion go side by side in a mutually supportive way (Neumayer, 2017). In 2010, the EU launched the EU Strategy, named “Europe 2020” targeting to achieve a smart, inclusive and sustainable growth. In 2010, the EU adopted the Communication on Trade, Growth, and World affairs that further helped the EU to support its green growth and achieve objectives of climate change. Moreover, the EU trade policy intended to promote and support green growth across the world such as, resource efficiency, energy and biodiversity protection. The importance of sustainable development and trade of the EU was also observed in the Communication on Trade, growth and Development of 2012. This further highlighted on some specific value regarding sustainable development in the context of development. Hence, some trade instruments can be mentioned that the EU adopted to integrate sustainable development along with environmental objectives and these can be described as follows:
Firstly, the EU involved actively at the multilateral level to work with the WTO Committee on regular session of trade and environment. The negotiation committee targeted to advance the mandate of Doha. However, these negotiations could not develop further. In 2014, the EU along with other 13 WTO members launched the initiative of Green Goods that further aimed to eliminate tariffs on green goods mentioned, indentified by board. The chief focus was to make an agreement that could address other trade related barriers. Secondly, at the regional and bilateral level, the EU took policy to negotiate and implement environmental provisions (Morin & Jinnah, 2018). This was a part of Trade and Sustainable Development (TSD) in the context of trade agreements. This agreement targeted to pursuit protection with high level, effective enforcement of domestic laws. Some specific provisions encouraged trade practices along trading schemes to assist and promote goals of sustainable development. This provisions also focused on sustainable management and used of natural resources.
Thus, this essay can conclude that trade and environment has deep relationship, as one can influence the other effectively. Free trade agreement has influenced both developed and developing countries to make a trading relation with other countries across the world. However, increasing amount of export has adversely caused its environmental degradation. This can be seen in the form of higher level of carbon emission and higher usage of pesticides in agricultural sector that further creates air, water and soil pollution. As a result, government of different countries have adopted and implemented various trade policies to protect environmental condition. The member counties of WTO have also accepted sustainable development policy that based on the use of natural resources in a systematic way that future generation can also use these resources. For this, these countries have taken the Doha Agenda that have dealt with sustainable resources. The EU has also adopted some trading policies that has discussed about this issue.
Carley, M., & Christie, I. (2017). Managing sustainable development. Routledge.
Costantini, V., Crespi, F., Marin, G., & Paglialunga, E. (2017). Eco-innovation, sustainable supply chains and environmental performance in European industries1. Journal of cleaner production, 155, 141-154.
Dean, J. M. (2017). International Trade and the Environment. Routledge.
Farsund, A. A., Daugbjerg, C., & Langhelle, O. (2015). Food security and trade: reconciling discourses in the Food and Agriculture Organization and the World Trade Organization. Food Security, 7(2), 383-391.
Holladay, J. S., Mohsin, M., & Pradhan, S. (2018). Emissions leakage, environmental policy and trade frictions. Journal of Environmental Economics and Management, 88, 95-113.
Kiefer, D., & Rada, C. (2014). Profit maximising goes global: the race to the bottom. Cambridge Journal of Economics, 39(5), 1333-1350.
Kolk, A. (2016). The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), 23-34.
Li, Y., & Beghin, J. C. (2017). A meta-analysis of estimates of the impact of technical barriers to trade. In Nontariff Measures and International Trade (pp. 63-77).
Martin, W. (2018). A Research Agenda for International Agricultural Trade. Applied Economic Perspectives and Policy, 40(1), 155-173.
Morin, J. F., & Jinnah, S. (2018). The untapped potential of preferential trade agreements for climate governance. Environmental Politics, 27(3), 541-565.
Neumayer, E. (2017). Greening trade and investment: environmental protection without protectionism. Routledge.
Sun, H., Tariq, G., Kong, Y., Khan, M. S., & Geng, Y. (2018). Nexus between environmental infrastructure and transnational cluster in one belt one road countries: Role of governance. Business Strategy & Development, 1(1), 17-30.
WTO | Trade and environment. (2018). Wto.org. Retrieved 17 September 2018, from https://www.wto.org/english/tratop_e/envir_e/envir_e.htm
Yan, Z., Yi, L., Du, K., & Yang, Z. (2017). Impacts of Low-Carbon Innovation and Its Heterogeneous Components on CO2 Emissions. Sustainability, 9(4), 548.
Zhan, Y., Tan, K. H., Ji, G., Chung, L., & Chiu, A. S. (2018). Green and lean sustainable development path in China: Guanxi, practices and performance. Resources, Conservation and Recycling, 128, 240-249.
Zubedi, A., Jianqiu, Z., Arain, Q. A., Memon, I., Khan, S., Khan, M. S., & Zhang, Y. (2018). Sustaining Low-Carbon Emission Development: An Energy Efficient Transportation Plan for CPEC. Journal of Information Processing Systems, 14(2).
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