Reproduced, with permission, from:
U.S. Office of Technology Assessment. 1992. Trade and the environment: Conflicts and opportunities. Report no. OTA-BP-ITE-94. Washington, D.C.: Government Printing Office.
One difficulty in addressing trade/environmental disputes is the wide range of opinions about the nature, severity, and political responsibility for specific environmental problems. The rationale for using trade measures to achieve environmental objectives depends in part on how such problems are viewed by different countries. The breakdown below illustrates some of the possibilities.
Some environmental problems (ozone depletion is perhaps the most conspicuous example) are global in nature---activity in one location can affect the Earth's environment as a whole. Some other problems, while not necessarily global, have impacts that cross national borders (e.g., sulfur dioxide emissions in one country contributing to acid rain in another).
On a common-sense level, other countries have a greater stake in a problem when it affects their own environment or the global commons. If pollution (or some other form of environmental degradation) extends beyond a country's borders, the polluting country may have less incentive to minimize that degradation than if all of the damage was contained domestically. Other countries may try to influence the polluting country to pollute less; when they succeed, global welfare may benefit.
Sometimes, countries will adopt international environmental agreements with trade provisions, such as the 17 agreements referenced in table 2-1. Multilateral agreements can have extensive, but seldom universal, support among trading partners; for example, while 79 countries have agreed to curb emissions of chemicals that deplete the Earth's ozone layer under the Montreal Protocol, there are over 100 members of GATT. There are also numerous bilateral environmental agreements, some of which have trade implications. However, countries sometimes take unilateral action to address a problem they think justifies trade measures, a step that can prompt resentment of others.
The justification for influencing environmental conduct abroad is more difficult when the conduct appears to have only local effect. In this case, one country's lax environmental regulations might not pose an environmental problem for other countries. The level of regulation that serves one country' s interest can differ markedly from what serves other countries' interests. Differences in industrial makeup can affect priorities in environmental regulations. Geographic and climatic conditions can influence the way in which air pollution disperses. Some ecosystems are more vulnerable to damage than others when exposed to similar kinds of pollution.
However, the line between local and nonlocal effects is inevitably arbitrary. Locally used toxic substances can be transported far from their points of origin. For example, pesticides, polychlorinated biphenyls (PCBs), lead, and dioxins are found in Arctic regions, including potentially hazardous levels of PCBs in the breast milk and blood of Inuit people in northern Quebec.[1]
Another complication for trade/environmental policy is that, as scientific knowledge grows, actions once thought to have only local effect can become global problems in time, while other problems thought to be quite serious may come to be seen as less so. Activities as diverse as driving a car, using an electrical appliance, raising cattle, and cutting down trees are now widely viewed as contributing to global warming potential, a concern that hardly existed two decades ago. At the same time, some policies taken on the basis of precaution may need reevaluation as additional information is developed. For example, the U.S. Environmental Protection Agency is reevaluating dioxin standards. Stringent standards to control human exposure to dioxin were established in the mid-1980s. With increasing understanding of how dioxin works at the molecular level, some experts believe that certain U.S. dioxin standards need reevaluation. Recent research also suggests to some scientists that dioxin is a less potent carcinogen than suspected when initial standards were set. However, other adverse health effects may occur from low levels of dioxin exposure, thus complicating the reevaluation effort.[2] Risk analysis, to weigh risks against economic costs, is often proposed as a way to balance the costs and benefits of environmental regulation; others believe prudence dictates precaution.
Governments vary in their response to environmental risks. Even affluent countries in recession find that immediate economic needs often take precedence over longer term environmental objectives, so that, for example, the employment and economic activity of a polluting industry is more readily viewed as outweighing environmental costs. For poorer countries, struggling to meet the population's basic human needs, the choices are often more stark. In principle, a country's preferred tradeoff of environmental and other goals would normally involve at least some level of environmental regulation; yet in some cases pollution has not been effectively regulated at all.
The environmental degradation now apparent in Eastern Europe and the independent states of the former Soviet Union provide some conspicuous examples of the latter. In some cases, well-known and readily available technologies for abating gross pollutants were forgone by Communist decisionmakers in pursuit of increased production. Despite official claims of environmental concern, the Ceaucescu regime in Rumania in some cases sought to develop industries to produce hazardous chemicals with few safeguards for the environment or workers; some of the chemicals were banned or highly regulated in the West.[3] Also, in what is now the Czech and Slovak Federal Republic, poor environmental regulation and enforcement have contributed to high levels of PCBs, lead, and other toxic materials in human tissue; frequent occurrence of respiratory disease in children; and, it is claimed, expected average lifespans that are low by Western standards (but similar to that of other Eastern European states).[4]
Industrial countries may neglect environmental and health concerns in the face of other national priorities. For instance, throughout much of the Cold War, U.S. defense facilities, including the nuclear weapons complex, operated with little environmental regulatory oversight. The result has been massive environmental contamination and potentially serious threats to health and the environment.[5] And industrial countries can also be shortsighted in evaluating environmental risks: waste disposal regulations that seemed adequate at the time have left the United States with a hazardous waste problem of massive proportions.[6]