Trade policy and the environment
is one of the most controversial issues on the current trade policy agenda.1 These issues have been brought into particularly sharp relief by climate change policies currently under consideration in some developed countries that would impose on imports at the border similar burdens, in terms of carbon taxes or emission trading allowances, to those imposed on domestic industries. Two very different classes of claims are made for linking trade policy and environmental concerns.
One class of claim emphasizes the cross-border nature of many environmental problems that entail negative externalities beyond any given jurisdiction. In some cases these concerns implicate the global environmental commons, including the impact of greenhouse gas emissions on climate change; in other cases, shared natural resources or common water or air bodies that straddle the boundaries of more than one jurisdiction. In all these cases, effective environmental regulation ideally requires cooperation amongst all member countries affected by the environmental concern in question. In some cases, trade sanctions, such as a ban on imports, can be seen as a way of enforcing compliance with multilateral environmental agreements (MEAs); in other cases, as inducing non-members to become signatories to such agreements; and in yet other cases, as providing the impetus for the negotiation of such an agreement in the first place.
With this class of claim, it is important to evaluate the likely efficacy of trade sanctions in achieving their intended objective: the empirical evidence suggests that trade sanctions are effective in about one-third of...
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