tradeandtheenvironmentdebatewto,kyotoandbeyond.docVIP

Trade and the Environment Debate: WTO, Kyoto and Beyond Kristalina Georgieva and Muthukumara Mani The traditional trade-environment argument For the last ten years or so, environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. It has been intensified by the creation of the World Trade Organization and proposals for future rounds of trade negotiations. The debate initially was quite contentious and unproductive as both parties differed greatly in their trust of market forces and typically value the environment differently. Free traders feared that talk about environmental protection will be used as an excuse by some economic sectors to gain protection for themselves against competition from abroad. Environmentalists feared that free trade will be used as an excuse to give inadequate weight to environmental goals and excessive weight to maximization of market-measured GDP. The importance of establishing coherent relationships between the trade obligations set out in various bilateral/multilateral trade agreements and environmental policies of countries is increasingly being recognized. The concerns with environmental implications of trade involve both the domestic implications of policy reforms as well as the global environmental dimension of bilateral and multilateral trade agreements. Although liberalizing reforms generally promote more efficient resource use (including use of environmental resources), in practice there is no clear-cut reason to expect that trade liberalization will be either good or bad for the environment. The reason is that trade reforms undertaken in the presence of pre-existing market, policy or institutional imperfections in the environment or natural resource sector may lead to adverse environmental impacts. Some of the common concerns include: Reducing barriers to trade will reinforce the tendency for countries to export commodities that make