1. Trade and the environment Specialization Income Growth Technology Transport Environmental policy Trade liberalisationThe environment Pollution-havens Weak evidence, except for some industries Environmental Kuznets curve? Pollution differs amongst equally rich countries Environmental problems must be internalized Uncertain trade → growth link. Institutions Transfer of technology Spill-over from preferences, policies and standards in rich countries More transportation – energy, alien species Less transportation – distance, lower subsidies, less tariff escalation “Race to the bottom”/”chilling effect” Competitiveness, harmonisation Political effect of free trade Source: Bach (2004): International Trade, Development Aid. and the Multilateral Environmental Agreements, Paper prepared for the Danish Ministry of Foreign Affairs, March 2004

2. Core problems in current WTO legislation Non-discrimination - ”like products” Production and Processing Methods (PPMs) Least-Trade distortive Environmental exception - GATT article XX Core disputes Tuna-Dolphin Shrimp-Turtle Beef hormone Asbestos Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: “... (b) necessary to protect human, animal or plant life or health; “... (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;...”

3. Core issues in the WTO negotiations Environmental standards and labels – green protectionism Subsidies – double-win Environmental goods and services – triple-win Multilateral environmental agreements and the WTO – conflict or cooperation Average tariff levels for environmental goods (in ad valorem percentage terms) Applied MFNBound End UR Canada, EU, Japan, US2.12.7 Korea, Mexico, Turkey8.222.4 Czech and Slovak Republic, Hungary, Poland7.47.0 Argentina, Brazil, Chile, Venezuela11.229.2 China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, Taiwan, Thailand, Vietnam 9.735.9 Estonia, Latvia, Lithuania, Romania, Russian Federation, Slovenia, Ukraine 5.136.0 Source: OECD (2002), Average tariff levels for environmental goods http://www.oecd.org/dataoecd/50/12/2484545.pdf

4. Conclusion: Trade and the environment No clear link between openness and the state of the environment - depends on the state of environmental policies, regulations and institutions Trade may amplify the state of the environment. In some cases trade measures are needed, But trade policies are second- or third-best options and may divert attention from appropriate environmental policies Avoiding trade measures may inspire international measures Trade liberalisation and environmental policies must go hand in hand A more nuanced debate on environmental labels Clear win-win situations for subsidies and environmental goods and services The dramatic clash between MEAs and the WTO has not appeared but some problems remain Source: Bach (2004): International Trade, Development Aid. and the Multilateral Environmental Agreements, Paper prepared for the Ministry of Foreign Affairs in Denmark, March 2004