Free trade and the environment

Environmental Ethics

Volumn 31, Issue 1, 2009, Pages 51-66

  Hassoun, Nicole ^a,b  

^a CARNEGIE MELLON UNIVERSITY   (United States)

^b UNIVERSITY OF PITTSBURGH   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 64649086983     PISSN: 01634275     EISSN: None     Source Type: Journal    
DOI: 10.5840/enviroethics20093115     Document Type: Conference Paper

References (84)

1. Stephen M. Gardiner, "The Global Warming Tragedy and the Dangerous Illusion of the Kyoto Protocol," Ethics and International Affairs 18, no. 1 (2004): 23-41.
2. United Nations Environment Program, "Environment for Development" (2008), http://www.unep. org.
3. Clark Wolf, "Anthropogenic Climate Change and Intergenerational Justice," in Justice Between Generations, ed. Axel Gosseries and Lukas H. Meyer (Oxford: Oxford University Press, 2008).
4. Hillary Mayell, "Climate Studies Point to More Floods in This Century," National Geographic News, 30 January 2002, http://news. nationalgeographic.com/news/2002/01 /0130-020130-greatfloods.html.
5. Dale Jamieson, "Adaptation, Mitigation, and Justice," in Perspectives on Climate Change: Science, Economics, Politics, Ethics, ed. Walter Sinnott-Armstrong and Richard Howarth, Advances in the Economics of Environmental Resources, vol. 5 (New York: Elsevier, 2005).
6. Peter Singer, Practical Ethics (Cambridge: Cambridge University Press, 1993).
7. Arne Naess, The Selected Works of Arne Naess, ed. Harold Glasser (New York: Springer, 2005). vols. 1-10.
8. Gardiner, "Global Warming Tragedy."
9. Singer, Practical Ethics.
10. Gardiner, "Global Warming Tragedy."
11. Joseph Des Jardins, Environmental Ethics: An Introduction to Environmental Philosophy, 4th ed. (Stamford Conn.: Wadsworth Publishing Co., 2006), chap. 5.
12. Gardiner, "Global Warming Tragedy."
13. Naess, Selected Works.
14. Gardiner, "The Global Warming Tragedy and the Dangerous Illusion of the Kyoto Protocol."
15. For explicit arguments for this conclusion, see Axel Gosseries, "Cosmopolitan Luck Egalitarianism and Climate Change," Canadian Journal of Philosophy, suppl. vol. (2007).
16. Also see Henry Shue, "Global Environment and International Inequality,"in Environmental Ethics. What Really Matters, What Really Works, ed. David Schmidtz and Elizabeth Willott (New York: Oxford University, 2002).
17. There are important questions about what mix of mitigation and adaptation to environmental problems like climate change is appropriate and who should bear the burden of paying for the necessary changes.In this paper, I am not concerned with these questions, however. For discussion, see n. 13.
18. Withering attacks on free trade abound in the popular as well as scholarly literature with authors arguing that the benefits of free trade are exaggerated while their social and environmental costs are neglected. See, for instance, Joseph E. Stiglitz, Globalization and its Discontents (New York: Norton: 2002).
19. For some such arguments, see Herman Daly, "Sustainable Growth? No Thank You," in The Case against the Global Economy and for a Turn toward the Local, ed. Jerry Mander and Edward Goldsmith (San Francisco: Sierra Club Books, 1996).
20. A similar argument can be made for investment-insofar as pollution abatement lowers profit, companies in pollution havens may be more likely to attract capital. See Rhys Jenkins, "Environmental Regulation and International Competitiveness: A Review of Literature and Some European Evidence," The United Nations University Institute for New Technologies Discussion Paper Series, Mastricht: United Nations University, January 1998 draft.
21. For further discussion of this argument, see, for instance: Durwood Zaelke, Paul Orbuch, and Robert Housman eds., Trade and the Environment: Law, Economics, and Policy (Washington D.C.: Island Press, 1993).
22. Also see Edward Goldsmith, "Global Trade and the Environment," in Mander and Goldsmith, The Case against the Global Economy.
23. There are other explanations for why free trade might lead to falling rather than rising pollution levels too. There may, for instance, be economies of scale in pollution abatement or structural changes that occur in developing country economies with free trade reforms.
24. E. B. Barbier, "Introduction to the Special Issue on Environmental Kuznets Curves," Environment and Development Economics 2, no. 4 (1997): 369-81.
25. There are two broad classes of studies that have direct bearing on the case for a race to the bottom in particular. The first set looks at pollution abatement costs and trade flows. These studies were pioneered by James Toby, "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos 43, no. 2 (1990): 191-209.
26. He finds no impact of regulatory costs on industry location. The second class of studies look at the location of clean vs. dirty industries post liberalization. See Patrick Low and Andrew Yeats, "Do 'Dirty' Industries Migrate?" in International Trade and the Environment, ed. Patrick Low, World Bank Working Paper 159 (Washington D.C.: World Bank, 1992).
27. Also see Robert Lucas, David Wheeler, and Hemamala Hettige, "Economic Development, Environmental Regulation, and International Migration of Toxic Industrial Production 1960-88,"
28. in Patrick Low, ed., International Trade and the Environment, World Bank Working Paper 159 (Washington D.C.: World Bank, 1992). Finally see Muthukumara Mani and David Wheeler, "In Search of Pollution Havens? Dirty Industry in the World Economy 1960-1995," in Trade, Global Policy and Environment, ed. Per G. Fredriksson (Washington: World Bank, 1997).
29. They also look at correlations between free trade and access to clean water.
30. This is so once instrumental variables are used to capture the impact of income levels and environmental regulation on trade and avoid endogeniety problems. Of course, other factors could explain the correlations they find. See Jeffrey Frankel and Andrew Rose, "Is Trade Good or Bad for the Environment? Sorting out the Causality," Review of Economics and Statistics 87, no. 1 (2005): 3-9 (page numbers from the September 2004 draft).
31. Grossman and Kruger use panel data. See Gene Grossman and Alan Krueger, "Environmental Impacts of the North American Free Trade Agreement," National Bureau of Economic Research Working Paper 3914 (Cambridge: National Bureau of Economic Research, 1991).
32. Comparable estimates are given in Theodore Panayotou, Green Markets: The Economics of Sustainable Development (San Francisco: ICP Press, 1993).
33. Nemat Shafik and Sushenjit Bandyopadhyay, "Economic Growth and Environmental Quality: Time Series and Cross-country Evidence," background paper prepared for World Development Report 1992: Development and the Environment (New York: Oxford University Press, 1992).
34. Amounts expressed in 1985 U.S. dollar purchasing power parity except for Panayotou (1995).
35. David Stern. "The Rise and Fall of the Environmental Kuznets Curve," World Development 32, no. 8 (2004): 1437.
36. See Steve Charnovitz, "World Trade and the Environment: A Review of the New WTO Report," Georgetown International Environmental Law Review 12, no. 2 (2000): 523-41.
37. Also see Hakan Nordstrom and Scott Vaughan, Trade and Environment, World Trade Organization Special Studies 4 (Geneva: World Trade Organization, 1999).
38. Werner Antweiler, Brian Copeland, and M. Scott Taylor, "Is Free Trade Good for the Environment?" Department of Economics University of British Columbia Working Paper Number 98-11, Vancouver, B.C.: University of British Columbia, 1998.
39. Stern, "The Rise and Fall of the Environmental Kuznets Curve," p. 1423.
40. Some worry about the quality and representativeness of the data on environmental degradation. Others worry generally about heteroskedacity, endogeneity, and omitted variable bias. For an overview, see ibid, pp. 1419-39.
41. Vivek Suri and Duane Chapman, "Economic Growth, Trade and the Energy: Implications for the Environmental Kuznets Curve," Ecological Economics 25 (1998): 195-208.
42. See Grossman and Krueger, "Environmental Impacts of the North American Free Trade Agreement." Some also argue that one cannot generalize from what has happened in the past to what will happen in the future for other reasons. The early studies of the EKC use statistical methods that do not support generalization. If studies estimate correlations using fixed-effects models, and GDP is an integrated variable, they must make sure the EKC regressions do not co-integrate to avoid spurious estimates. Few studies completed before 1999 look for co-integration. See Stern, "The Rise and Fall of the Environmental Kuznets Curve," p. 1423.
43. Jamieson, "Adaptation, Mitigation, and Justice."
44. Mayell, "Climate Studies Point to More Floods in This Century."
45. Studies also show that the scale effect is not offset by technological change in some sectors. Evidence suggests that in the agricultural sector, for instance, technological change has not offset the scale effect. See Commission for Environmental Cooperation of North America, "Free Trade and the Environment: The Picture Becomes Clearer," North American Symposium on Understanding the Linkages between Trade and the Environment (Quebec: Commission for Environmental Cooperation of North America, 2002), pp. 26-27.
46. There is a different way of challenging the "Race to the Bottom Argument" empirically that is also worth mentioning. Several economists have looked at whether industries actually tend to move to low regulation environments from high regulation environments with free trade. Many argue that the impact of environmental regulation on industry location decisions is very small or non-existent. See Toby, "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test."
47. Also see Cees van Beers, "International Trade, Environment, and Sustainable Development," in Economics of Sustainable Development: International Perspectives, ed. Mario Cogoy and Karl Steininger (Cheltenham, U.K.: Edward Elgar, 2006), p. 16.
48. Other factors are probably much more important than environmental standards on industry location decisions. See Low and Yeats, "Do 'Dirty' Industries Migrate?"
49. Also see Jenkins, "Environmental Regulation and International Competitiveness," pp. 14-16.
50. Researchers have found impacts in some industries and races in some countries, however. See van Beers, "International Trade, Environment, and Sustainable Development."
51. Also see Jenkins, "Environmental Regulation and International Competitiveness," pp. 22-23.
52. Organisation for Economic Cooperation and Development, "Reforming Coal and Electricity Subsidies," Annex I Expert Group on the United Nations Framework Convention on Climate Change, Working Paper No. 2 (Paris: Organisation for Economic Cooperation and Development, 1997), http:// www.oecd.org//env/docs/cc/gd9770.pdf.
53. If reducing subsidies leads to lower prices and more consumption of coal energy, however, climate change could even increase as a result. See ibid. The details of this particular example are simply meant to illustrate the general point; other examples can be given if this case proves to be a poor one.
54. Nicole Hassoun, "The Case for Renewable Energy and a New Energy Plan." International Journal of Environmental, Cultural, Economic and Social Sustainability 1, no. 5 (2005): 197-208.
55. Ibid.
56. Certainly, meeting some other moral objectives may reduce environmental problems. If, for instance, free trade helps the poor then it may also be the best thing for the environment because poor people contribute greatly to environmental problems. See Nicole Hassoun, "Free Trade, Poverty, and the Environment," Public Affairs Quarterly 22, no. 4 (2008): 353-80. Still there will probably be times when tradeoffs are necessary. Tradeoffs may also be necessary between meeting different environmental objectives.
57. Further analysis is also necessary to see when using non-trade-related means of mitigating environmental problems is preferable to using trade-related means.
58. Such reasons are defeasible. Other considerations may yield conflicting recommendations.
59. For more information see World Trade Organization, "The General Agreement on Tariffs and Trade (GATT 1947)," Legal texts: GATT1947 Article XVIII-XXXVIII (Geneva: World Trade Organization, 2006), http://www.wto.org/ english/docs-e/legal-e/gatt47-02-e.htm.
60. We can use environmental impact assessments for trade reforms to determine both what the likely impact of a reform will be and which compensatory policies are likely to be successful. Some trade agreements investigate the environmental impacts of their policies upon request.
61. On fair trade, see Mathias Risse, "Fairness in Trade," Harvard University Working Paper (Boston: Harvard University, 2006), http://ksghome.harvard.edu/̃mrisse/docs/cv0306.pdf.
62. For critique, see Nicole Hassoun, "Making Free Trade Fair," Carnegie Mellon University Working Paper (Pittsburgh: Harvard University, 2008), http://www.hss.cmu.edu/philosophy/hassoun/papers.php.
63. There are many fair trade certification schemes. Some are better than others. See http://www.fairtrade.org.uk/about-standards.htm and http://www.transfairusa.org/content/certification/overview.php for examples.
64. Fair trade coffee is usually shade grown, for instance. Coffee produced in this way is grown under the rain forest's canopy rather than in clearings usually created by burning down rain forests.
65. See http://www.fairtrade.org.uk/about-standards.htm and http://www.transfairusa.org/content/certification/overview.php for further information.
66. van Beers, "International Trade, Environment, and Sustainable Development."
67. Emmanuel Saez, "Direct or Indirect Tax Instruments for Redistribution: Short-Run versus Long-Run," Journal of Public Economics 88 (2004): 503-18.
68. Also see James Anderson, "The Relative Inefficiency of Quotas," Journal of Economic Education 19, no. 1 (1988): 65-81.
69. Some such options are mentioned above, for instance.
70. Thomas Pogge, "Severe Poverty as a Human Rights Violation," in Thomas Pogge, ed., Freedom from Poverty as a Human Right: Who Owes What to the Very Poor? (Oxford: Oxford University Press, 2006).
71. Emmanuel Saez, "Direct or Indirect Tax Instruments for Redistribution: Short-Run versus Long-Run," Journal of Public Economics 88 (2004): 503-18.
72. Ibid.
73. Ibid.
74. Robert E. Baldwin, "The Political Economy of Trade Policy," Journal of Economic Perspectives 3, no. 4 (1989): 119-35.
75. On this see Daniel Esty, "Bridging the Trade-Environment Divide," Journal of Economic Perspectives 15, no. 3 (2001): 113-30.
76. Joseph Stiglitz, "A New Agenda for Global Warming," The Economists' Voice, July 2006.
77. Brink Lindsey, Mark A. Groombridge, and Prakash Loungani, "Nailing the Homeowner: The Economic Impact of Trade Protection of the Softwood Lumber Industry," CATO Trade Policy Analysis 11 (2006): 1-16.
78. See World Trade Organization, "Sustainability and Environmental Impact Assessment of Trade Negotiations" (Geneva: World Trade Organization, 2006), http://www.wto.org/english/forums-e/public-forum-e/session-25-num9-e. htm.
79. Perhaps such panels could also decide whether a trade policy that does help the environment can be justified in light of competing considerations.
80. If it is difficult it is to tell whether or not trade policies will protect the environment, the WTO might remain skeptical of trade policies not primarily motivated by concern for the environment. There is room here for fruitful policy-relevant research on the conditions under which industries should be allowed to push environmental protection. See Charnovitz, "World Trade and the Environment."
81. Also see Nordström and Vaughan, Trade and Environment.
82. In defense of this argument, see van Beers, "International Trade, Environment, and Sustainable Development."
83. This argument appears throughout the development literature and is given by all kinds of official organizations. See, for instance, European Union, "Economic Partnership Agreements and Free Trade- Myths and Reality," EU-Uganda News: A Quarterly News Letter of the Delegation of the European Commission in Uganda December (2004).
84. Countries often appeal to the value of sovereignty to justify environmentally destructive practices. For discussion, see Durwood et. al., Trade and the Environment.