Trade's environmental record defended

WTO report promotes further cuts in subsidies, more global environmental rule-making

New multilateral cuts in subsidies on agriculture, energy and fisheries could benefit both trade and the environment, according to a World Trade Organisation (WTO) report to be published on Thursday. The report defends the environmental record of trade, and says that the way forward is stronger global environmental cooperation based on the same model as the WTO rather than halting the process of trade liberalisation.

Despite being published "unofficially" by the WTO, the report could prove controversial as world governments prepare for the millennium round of world trade talks in Seattle in little more than one month's time. Both the EU and the USA have called for environmental issues to have a high profile in the talks, but global environmental, developmental and other NGOs are gearing up to stage huge protests, arguing that the WTO and the free trade model it promotes are undemocratic and ruinous to the world's poor and the environment.

Not at all, argue Håkan Nordström, a WTO analyst, and Scott Vaughan, who works in the environmental cooperation body of the North America free trade agreement (Nafta). In itself, trade very rarely harms the environment, they argue; rather, it is polluting production processes, over-consumption and waste disposal that are to blame, especially where the costs of environmental degradation are not internalised into prices.

Drawing on a growing number of academic studies, the officials counter many anti-free trade arguments. Competitiveness effects of pollution control regulations are minor, they claim, and rich countries are exporting labour-intensive rather than pollution-intensive industries to the developing world. Furthermore, multinational firms are moving towards a standard high level of technology worldwide rather than using more polluting plants in poorer countries, the authors say.

While claiming that the overall relationship between trade and environment is at least neutral and could be positive, the report does acknowledge some specific areas where the evidence points to trade having some harmful effects.

In particular, the authors find that trade and competitiveness issues have led to "regulatory chill" on several occasions, by preventing agreement of new environmental controls. "Some evidence suggests that industries often appeal to competitiveness concerns when lobbying against environmental regulations, and on occasion with some success," they write.

The solution, the report argues, is that environmental regulations should follow the globalisation of trade by themselves becoming more global. In this case, they say, "regulatory chill" would be a temporary phenomenon, analogous to "foot-dragging" in some national environmental policy making before the 1970s, following which several federal countries shifted more responsibility for environmental protection from state to national level.

Follow Up:
WTO, tel: +41 22 739 5000. References: Summary of "Trade Liberalisation Reinforces the Need for Environmental Cooperation".

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