McGraw-Hill/Irwin © 2012 The McGraw-Hill Companies, All Rights Reserved Chapter 13: Trade and the Environment

Two provocative questions. 1.Is free trade anti-environment? 2.is the World Trade Organization anti-environment?

The difficulty of addressing trans-border pollution is also shown through a discussion of the slow progress that NAFTA has made in attempting to ameliorate environmental problems along the Mexico-U.S. border. The difficulty of addressing trans-border pollution is also shown through a discussion of the slow progress that NAFTA has made in attempting to ameliorate environmental problems along the Mexico-U.S. border. In addition, the box on “Dolphins, Turtles, and the WTO” discusses two cases in which the WTO ruled against U.S. import restrictions intended to force foreign fishing fleets to adopt methods that reduce killing of dolphins and sea turtles. In addition, the box on “Dolphins, Turtles, and the WTO” discusses two cases in which the WTO ruled against U.S. import restrictions intended to force foreign fishing fleets to adopt methods that reduce killing of dolphins and sea turtles.

Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved Figure 13.1 Environmental Problems by Income Level

Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved Exports Plus Imports as a Percentage of GDP Figure 13.2 Environmental Effects of the Uruguay Round, Percent Changes in Emissions

Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved Figure 13.3 Types of Externalities and Product-Market Prescriptions

Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved Figure 2.2 The Market for Motorbikes: Demand and Supply Figure 13.4 When Domestic Production Causes Domestic Pollution

Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved Figure 13.5 A Classic Case of International Pollution with an Ideal Policy Solution

Four examples of global environmental problems. 1.The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) attempts to prevent extinction of species by restricting or banning commercial trade in threatened species. It has been reasonably effective. 2.Overfishing is an example of the tragedy of the commons. It does not threaten extinction for most species, but rather it results in fish catches that are smaller than they could be. 3.Release of chlorofluorocarbons (CFCs) has resulted in ozone depletion. The Montreal Protocol, signed in 1987, is an example of an effective international agreement. It began with restrictions on trade in CFCs and has spread to reduction of production of CFCs. Concentrations of CFCs in the atmosphere are now slowly declining.

4.The buildup of carbon dioxide and other greenhouse gasses in the atmosphere, and the likelihood that this is causing global warming. We cannot use science to predict exactly how much global warming will occur. A policy response consistent with the specificity rule is to tax consumption (or production) of fossil fuels on a nearly global scale. But an international agreement appears to be impossible to achieve. In 2001 the United States pulled out of the agreement made in the Kyoto Protocol. A policy response consistent with the specificity rule is to tax consumption (or production) of fossil fuels on a nearly global scale. But an international agreement appears to be impossible to achieve. In 2001 the United States pulled out of the agreement made in the Kyoto Protocol.

Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved Figure 13.6 Caron Tax to Stabilize Atmospheric Carbon Dioxide