International Trade and Its Impact on Environment

This essay tries to focus on international trade and its impact on environment of a country. For doing this, the essay focuses on free trade policies of different countries and the way this policy influences environment of exporting countries. In addition this, the essay also focuses on sustainable development based on the agenda of WTO. Through the entire discussion, the paper tries to describe that how trade can affect environment of a country in both positive and negative way.

Running head: INTERNATIONAL TRADE
International Trade
Name of the student
Name of the University
Author Note

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Executive Summary:
This essay tries to focus on international trade and its impact on environment of a country.
For doing this, the essay focuses on free trade policies of different countries and the way this
policy influences environment of exporting countries. In addition this, the essay also focuses
on sustainable development based on the agenda of WTO. Through the entire discussion, the
paper tries to describe that how trade can affect environment of a country in both positive and
negative way.

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Table of Contents
Introduction:...............................................................................................................................3
Impact of trade on environment:................................................................................................4
Trade linearization and its impact on environment:...............................................................4
Sustainable Development:..........................................................................................................7
The Doha Development Agenda:...........................................................................................7
Use of trade agreements in the EU for protecting the environment:..........................................8
Conclsuion:................................................................................................................................9
References:...............................................................................................................................10

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Introduction:
The international economy has experienced a significant initiative to merge markets
for the last few decades and this in turn has formed many bilateral, multilateral as well as
regional trade agreements. This incorporation of markets from different countries has led the
international trade to grow further across the world. Those international agreements
theoretically have considered the environmental factors and consequently intend to minimize
the effect of international trade on the environment and try to resolve existing problems of
environment as well. Hence, this phenomenon has driven policy makers of different countries
to conduct various multidisciplinary research as well as policy implementation to overcome
issues relating with environment and international trade (Kolk, 2016). Trade is referred as
“engine of growth” of both developed and developing countries and after globalisation,
almost every country transacts goods and services with each other. Moreover, climate change
also creates an international problem and to reduce this, the governments of many countries
lead business sectors to produce eco-friendly products (Dean, 2017). The requirement for
changing the system of international trade has been discussed in many international
conferences though these summits have remained unable to reduce the global warming and
higher amount of carbon emission in both eastern and western countries.
Hence, this report has focused to analyse the relationship between international trade
and the environment through discussing about the impact of this economic activity on
international trade along with the impact of trade liberalisation on environment, the agenda of
sustainable development along with the usage of trade agreements for protecting the
environment, based on a country.

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Impact of trade on environment:
Trade linearization and its impact on environment:
Production as well as international trade affects the global environment in both
positive and negative way. To understand this situation more precisely it is essential to
observe free trade agreements through which a country can eliminate restrictions on imports
and stimulate international trade activity. Environmentalists have predicted that international
trade can weaken the national standard of environment if international trade agreements have
remained unable to impose these standards on imported products (Holladay, Mohsin &
Pradhan, 2018). Free trade influences a country to allocate resources more efficiently,
environmentally and economically. Previous models related to international trade has
represented that consumption of local products does not work more environment-friendly
than purchasing products from aboard. For instance, New Zealand produces sheep meat,
dairy and other horticulture products to export in the U.K markets. Increasing trade can
assist economic growth, development along with social welfare, which in turn can manage
the economy more accurately. Based on previous studies, it is observed that air pollution
increased due to higher amount of carbon emissions when a country shifted from a low per-
capita state to middle per-capita one. However, this pollution level started to reduce when this
country started to attain higher per-capita income (Costantini, Crespi, Marin & Paglialunga,
2017). In addition to this, many developing countries have also started to adopt
comparatively tougher policies to control pollution than that of OECD countries during same
development levels. Through understanding the links between health improvement, increase
productivity and pollution reduction, many developing countries have stated that controlling
pollution has higher benefit compare to its costs of production.
To sustain environment in a stable condition, companies in developing countries have
started to address pollution by considering the utilities of pollution charges or taxes. Through

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applying this technique, Indonesia and Philippines have successfully reduced the pollution
level. In addition to this, countries can create industrial parks for building heavy industries
like steel and chemicals, which obtain materials recovery at higher level, recycling along with
waste treatment. In this context, it can be mentioned that economic openness regarding
investment and trade can assist a country to adopt higher incentive along with improved
access in new environmental technologies. When a country incorporates in the international
economy, its exports activities become familiar in international market and consequently the
country needs to follow restrictions imposed by leading importers (Yan, Yi, Du & Yang,
2017). For meeting these trade related requirements, these exporting countries change their
production and trading pattern that can further stimulate these companies to use
comparatively cleaner processes of production and technologies. Some previous adoption
regarding environmental regulations have helped the world economy through adopting
regional and bilateral agreements between developing and developed countries where trade
agreements encourage comparatively less developed countries to strengthen their
environmental regulations along with resources and information to exchange (Sun, Tariq,
Kong, Khan & Geng, 2018). In this context, impact of trade liberalisation can be discussed on
various economic segments.
Carbon print on free trade:
According to an article of the Global Development and Environment Institute
(GDAE), free trade increases the level of carbon emission through transportation, chiefly
when the country exports goods to foreign markets (Zubedi et al., 2018). The chief goal of
trade liberalisation is to increase total production across the world and consequently 2008
report of the GDAE recognised that total pollution level as well as negative effects on
environment also increased accordingly.

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Agricultural effect:
Free trade influences agricultural sectors of exporting countries from different
aspects. For instance, corporate firms increase pesticide usage for producing higher amount
of agricultural products so that they can export higher amount of agro-based products to
foreign countries. This procedure further increases productivity capacity of marginal lands
and heavy use of pesticides causes air, soil and water pollution (Martin, 2018). However,
cultivation evolution of some crops to export with better quality has led positively affected
environment. For instance, farmers of Latin America and Africa have replaced domestic
crops with cocoa, coffee and other tree crops, as this process can reduce soil erosion. In
addition to this, Kenya has also adopted some modern and scientific technique to reduce
environmental eradication. The country has increased horticulture production to grow
flowers with high quality to export in Europe (Li & Beghin, 2017). However, flowers have
also affects environment adversely due to excessive use of pesticide. Moreover, this country
exports flowers through jet, which intakes more energy. The GDAE has noted that energy
used in Kenya for cultivating and exporting flowers is comparatively low than energy
required to grow flowers in heated green houses of Europe.
Race to the Bottom:
Free trade leads countries to export pollution to importing countries, as production
plants moves to those countries with comparatively cheaper workforce and low standard of
environment. In a report of the Globalisation Council, published in 2009, increasing large-
scale production has brought a “race to the bottom” for regulating national environment
(Kiefer & Rada, 2014). It is assumed that new production technique can facilitate a country to
bring clear environment with modern technology and innovative production process.

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Sustainable Development:
Sustainable development is the process of development that intends to meet the
requirements of the present generation without compromising the chances of future
generations to fulfil their needs. The main concept of sustainable development can be of
different types though the chief focus of this approach to improve the difference between
balance, requirements against an environmental awareness considering both social and
economic barriers that a society experiences (Carley & Christie, 2017). Without considering
the impact of future, only a particular requirement leads the economy to develop further. The
WTO chiefly focuses on preservation and protection of the environment and these activities
are included in the Marrakesh Agreement. This agreement helps the WTO to fulfil its
objectives for declining trade barriers along with eliminating of discriminatory treatment
based on international trade relations. For obtaining sustainable development, no such
agreement has been generated, though the WTO members have adopted some measures
related to trade, focusing on environment protection (Zhan et al., 2018). This protectionism
provides various conditions to restrict the misuse of natural resources. The WTO provides
environment protection along with preservation through trade openness, rules and mechanism
of enforcement with the help of different WTO bodies and some efforts of the Doha
Development Agenda.
The Doha Development Agenda:
In December 2015, the 10th Ministerial Conference of the WTO was held where WTO
members agreed various important issues taken in the Doha Development Agenda and
consequently framed the future negotiations of these agreements. This Doha Round of the
WTO, known as the Doha Development Agenda, was launched in Doha, 2001 (Wto.org,
2018). This agenda targeted to liberalise trade for making it easier for developing countries.
Especially, Least Developed Countries (LDC) integrated successfully into the multilateral

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system of the WTO (Farsund, Daugbjerg & Langhelle, 2015). The chief objectives of this
agenda were to reform agricultural subsidies, confirming that new liberalisation in world
economy considers the requirement for sustainable economic growth for developing countries
and improving access in international markets of developing countries for exporting their
products.
Use of trade agreements in the EU for protecting the environment (Case Study):
To promote sustainable development in international market, the European Union has
taken various steps to incorporate environmental concerns with its external relations along
with trade policies. Special emphasis has been given on environmental issues to develop
stronger international co-operation with the help of an enlarging system of United Nations
and to find a great balance between agreements related to multilateral environment and
liberalised trade rules. The EU has set up strategies on sustainable development with a long-
term vision for sustain where economic growth, environmental protection and social cohesion
go side by side in a mutually supportive way (Neumayer, 2017). In 2010, the EU launched
the EU Strategy, named “Europe 2020” targeting to achieve a smart, inclusive and
sustainable growth. In 2010, the EU adopted the Communication on Trade, Growth, and
World affairs that further helped the EU to support its green growth and achieve objectives of
climate change. Moreover, the EU trade policy intended to promote and support green growth
across the world such as, resource efficiency, energy and biodiversity protection. The
importance of sustainable development and trade of the EU was also observed in the
Communication on Trade, growth and Development of 2012. This further highlighted on
some specific value regarding sustainable development in the context of development. Hence,
some trade instruments can be mentioned that the EU adopted to integrate sustainable
development along with environmental objectives and these can be described as follows:

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Firstly, the EU involved actively at the multilateral level to work with the WTO
Committee on regular session of trade and environment. The negotiation committee targeted
to advance the mandate of Doha. However, these negotiations could not develop further. In
2014, the EU along with other 13 WTO members launched the initiative of Green Goods that
further aimed to eliminate tariffs on green goods mentioned, indentified by board. The chief
focus was to make an agreement that could address other trade related barriers. Secondly, at
the regional and bilateral level, the EU took policy to negotiate and implement environmental
provisions (Morin & Jinnah, 2018). This was a part of Trade and Sustainable Development
(TSD) in the context of trade agreements. This agreement targeted to pursuit protection with
high level, effective enforcement of domestic laws. Some specific provisions encouraged
trade practices along trading schemes to assist and promote goals of sustainable development.
This provisions also focused on sustainable management and used of natural resources.
Conclsuion:
Thus, this essay can conclude that trade and environment has deep relationship, as one
can influence the other effectively. Free trade agreement has influenced both developed and
developing countries to make a trading relation with other countries across the world.
However, increasing amount of export has adversely caused its environmental degradation.
This can be seen in the form of higher level of carbon emission and higher usage of pesticides
in agricultural sector that further creates air, water and soil pollution. As a result, government
of different countries have adopted and implemented various trade policies to protect
environmental condition. The member counties of WTO have also accepted sustainable
development policy that based on the use of natural resources in a systematic way that future
generation can also use these resources. For this, these countries have taken the Doha Agenda
that have dealt with sustainable resources. The EU has also adopted some trading policies
that has discussed about this issue.

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References:
Carley, M., & Christie, I. (2017). Managing sustainable development. Routledge.
Costantini, V., Crespi, F., Marin, G., & Paglialunga, E. (2017). Eco-innovation, sustainable
supply chains and environmental performance in European industries1. Journal of
cleaner production, 155, 141-154.
Dean, J. M. (2017). International Trade and the Environment. Routledge.
Farsund, A. A., Daugbjerg, C., & Langhelle, O. (2015). Food security and trade: reconciling
discourses in the Food and Agriculture Organization and the World Trade
Organization. Food Security, 7(2), 383-391.
Holladay, J. S., Mohsin, M., & Pradhan, S. (2018). Emissions leakage, environmental policy
and trade frictions. Journal of Environmental Economics and Management, 88, 95-
113.
Kiefer, D., & Rada, C. (2014). Profit maximising goes global: the race to the
bottom. Cambridge Journal of Economics, 39(5), 1333-1350.
Kolk, A. (2016). The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
23-34.
Li, Y., & Beghin, J. C. (2017). A meta-analysis of estimates of the impact of technical
barriers to trade. In Nontariff Measures and International Trade (pp. 63-77).
Martin, W. (2018). A Research Agenda for International Agricultural Trade. Applied
Economic Perspectives and Policy, 40(1), 155-173.
Morin, J. F., & Jinnah, S. (2018). The untapped potential of preferential trade agreements for
climate governance. Environmental Politics, 27(3), 541-565.

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Neumayer, E. (2017). Greening trade and investment: environmental protection without
protectionism. Routledge.
Sun, H., Tariq, G., Kong, Y., Khan, M. S., & Geng, Y. (2018). Nexus between environmental
infrastructure and transnational cluster in one belt one road countries: Role of
governance. Business Strategy & Development, 1(1), 17-30.
WTO | Trade and environment. (2018). Wto.org. Retrieved 17 September 2018, from
https://www.wto.org/english/tratop_e/envir_e/envir_e.htm
Yan, Z., Yi, L., Du, K., & Yang, Z. (2017). Impacts of Low-Carbon Innovation and Its
Heterogeneous Components on CO2 Emissions. Sustainability, 9(4), 548.
Zhan, Y., Tan, K. H., Ji, G., Chung, L., & Chiu, A. S. (2018). Green and lean sustainable
development path in China: Guanxi, practices and performance. Resources,
Conservation and Recycling, 128, 240-249.
Zubedi, A., Jianqiu, Z., Arain, Q. A., Memon, I., Khan, S., Khan, M. S., & Zhang, Y. (2018).
Sustaining Low-Carbon Emission Development: An Energy Efficient Transportation
Plan for CPEC. Journal of Information Processing Systems, 14(2).