CIESIN Thematic Guides

Trade Policy and Global Environmental Change

In recent years the relationship between international trade and environmental policies has attracted increasing attention. In some ways international policies and instruments on trade and environment have compatible goals, but in others the objectives and effects appear to conflict. Issues within the trade-environment debate include

Much of the discussion of trade-environment issues centers around global trade institutions. Chief among them is the General Agreement on Tariffs and Trade (GATT), whose recent disputes and negotiations under the Uruguay Round have highlighted these concerns. Another global institution dealing with trade-environment issues is the United Nations Conference on Trade and Development (UNCTAD). UNCTAD was established by the United Nations General Assembly in 1964 to promote international trade and economic development, especially for developing countries. UNCTAD and GATT jointly operate the International Trade Center.

The United Nations Conference on Environment and Development (UNCED) in 1992 addressed links between trade policy and sustainable development. Chapter 2 of UNCED's Agenda 21 surveys trade liberalization, market access, "removal of existing distortions in international trade," and other mechanisms to make trade and sustainable development mutually supportive. Chapter 39 (section 3(d)) of Agenda 21 recommends relationships between international trade and environmental agreements. Principles 12 and 16 of the Rio Declaration suggest that environmental policies should not obstruct trade, although alternative trade treaty written by a group of nongovernmental organizations at the 1992 Global Forum criticizes the existing international trade regime's impact on the environment.

Regional trade pacts and institutions are another component of the trade-environment nexus. Agreements such as the North American Free Trade Agreement (NAFTA) directly address environmental concerns, and the Treaty on European Union (also known as The Maastricht Treaty) and Regional Economic Integration Organizations deal with trade-environment issues both in relations between their members and in global policy activities.

Whalley (1991) examines the use of trade measures in international environmental policy in "The Interface Between Environmental and Trade Policies," using tradeable emissions permits as an example of a trade instrument applied in an environmental regime. The U.S. Office of Technology Assessment (1992) report Trade and the Environment presents an extensive survey of issues in this area. Siebert (1980) surveys early research on the economic aspects of trade-environment issues in the introduction and bibliography of Trade and Environment.