Trade Policy and Environment

Running head: TRADE POLICY AND ENVIRONMENT
Trade Policy and Environment
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1TRADE POLICY AND ENVIRONMENT
It is a legal issue to determine whether environmental issues should be addressed in
the trade policy. Trade and production has an obvious impact on the environment and most of
them negatively impacts the environment. In Canada the increasing business opportunities are
facing the issues related to the impact of trade in the environment. Therefore, trade policies
should be drafted in such a way that it protects the environment. In order to protect the
environment from the damages of trades, a strict trade policy regulating the environmental
harms should be maintained to ensure the protection of the environment. Such a policy can
prove to be beneficiary for the environment as well as the mankind.
In modern times, the impact of trade activities over the environment has become a
serious concern. The trade economists have observed that trade opening affects the
environment (Panayotou, 2016) in the countries like Canada where business opportunities are
high. Trade liberalisation has impacted the environment by the scale, techniques and
composition of trade. A conceptual framework was created and applied in the North
American Free Trade Agreement, which helps in study the link between trade activities and
environmental change (Low, 2016). Trade opening affects greenhouse gas emission as it
involves energy use, which eventually leads to more greenhouse gas emission. However,
trade opening may result in innovation of some techniques to improve energy efficiency.
New techniques are introduced to regulate and control the greenhouse gas emission. Lastly,
composition effect of trade liberalisation would result in less greenhouse gas emission where
the sectors which are expending are likely produce greenhouse gas than those contracting
sectors. In this aspect, the reformulation of Gasoline Rule needs to be highlighted. Under the
US Clean Air Act, the gasoline rule, regulates the emission effects of gasoline, with an
objective to reduce the air pollution. It creates a figure for gasoline, using various methods
for imported and domestic gasoline. It was found that the Gasoline Rule was more

2TRADE POLICY AND ENVIRONMENT
favourable to the domestic gasoline than the imported gasoline violating the General
Agreement on Tariffs and Trade.
On the other hand, trade has resulted into economic growth of countries and thus
helping them to promote environmental up gradation. The continued growth of economy has
helped in adopting the needful measures to take sustainable environmental development
(Ciesin.org. 2018). The developed countries are willing to pay for improving the environmental
quality.
International environmental agreements, to which Canada is a party, address the
international environmental problems and applies the polluter-pays-principle as over the
world. Despite that, international environmental agreements are difficult to sustain. It has
been observed that lower priorities has been given to some countries to solve an
environmental problem than the other countries for different risk attitudes and preferences
(Copeland & Taylor, 2013). In fact, countries sometimes disagree with the scientific evidence
of environmental issues as it is observed in the recent climate change discussion. The per
capita differences in countries implies a different evaluation of environment irrespective of
identical risk attitudes and preferences.
There are many countries that grow or produce products for domestic sale and use
purpose as well as for the purpose of exporting. While growing cotton has led farmers and
producers to increase their profitability and the countries to gain an unexpected economic
revenue, it has caused some serious environmental damages. Therefore, it is extremely
required to adopt an efficient trade practice to avoid land degradation and soil erosion.
Additionally the cross border trade activities has sometimes caused to certain environmental
damages that cannot be recovered. Trade accidents occur as a part of the trade activities,
which harms the environment in a serious way. For example, in the year 2010, the remarkable