Can Trade Liberalization Be Aligned with Long-term Environmental Health?

by | Jan 14, 2011

Trade liberalization and free trade in their purest forms do little to encourage effective improvements in environmental quality. The goal of trade liberalization is to reduce or eliminate governmental oversight of international commerce.

Any environmental protection will be incidental unless there is:

  1. strong environment language written into trade agreements
  2. strong environmental regulations within each country to back up the language
  3. a means of monitoring and enforcing such rules

Trade liberalization should be seen for what it is: an economic activity. When discussing the costs and benefits of environmental policy, A. Myrick Freeman writes, “the purpose of economic activity is to increase the well-being of the individuals who make up society.”

Trade liberalization is for the purpose of relatively short-term economic gain and has little regard for longer term environmental health and safety.

The three major environmental concerns

Environmentalists often cite three major environmental concerns.  These concerns are legitimate and not properly solved with regard to trade liberalization. The three major concerns are:

  1. the movement of dirty, polluting industries to countries with less stringent environmental or health laws
  2. encouraging growth in countries with poor environmental records
  3. an easing of preexisting regulations in order for nations to compete

Shifting undesirable business practices to another HQ in another nation is perhaps the most insidious of all.  By moving polluting industries, one country can so easily “solve” its problems by creating an even worse situation for people in another country. We can already see this in the way developed nations take advantage of third-world countries (both legally and illegally), using them as a dumping ground for activities that are either too dirty or too expensive for wealthier nations to handle on their own soil. A current issue that comes to mind is the export of our electronic waste such as computers, TVs and cell phone carcasses to places like Africa and China.

The U.S., Europe and Japan could be said to take advantage of the weak regulations in other countries in terms of defunct electronics. As a result, mountains of so-called “e-waste” pile up, to be sifted through and disassembled by workers, often children, who may be exposed to toxic levels of things like lead, cadmium and mercury. Even when a country bans the imports of such waste, which China did in 2000, poor enforcement still allows literally tons of waste to be shipped in.

Another example of attempting to pay developing countries to deal with the waste of wealthier ones was seen recently with an aircraft carrier France attempted to have disassembled in India, because it was considered too toxic to take apart in France. Only because of public outrage and after a temporary injunction by the Indian Supreme Court, did the French government bring the ship back, eventually to have the ship dismantled in England.

In the end, many industries, whether they involve recycling toxic waste or manufacturing products that use or produce harmful toxins or pollution, will seek out the path of least resistance when given the freedom that unhindered trade allows.

Carnegie and Tufts study on liberal trade

In a report issued by the Carnegie Endowment for International Peace and Tufts University in 2008, the effects of agricultural free trade in Latin America were examined. The conclusions reach by the report was that liberalizing trade and allowing greater access to foreign markets had fewer benefits than originally believed.

They found that the trade agreements weaken job creation and lead to higher environmental costs. Reasons for this included that the markets were flooded with cheap agricultural imports, due to NAFTA, and that regional governments failed to invest in important infrastructure that would have supported local interests.

The results of the study suggest that trade agreements with developing nations must be carried out with sustainability in mind so that environmental impacts are minimized.

How trade liberalization can work

First, safeguards need to be built into each nation’s economic system to protect borders from receiving toxic materials.  Second, authorities must ensure that safeguards are written into any trade agreement.  Third – and to add realism to the discussion – countries who are negotiating trade agreements must realize that unforeseen environmental problems may occur in the future, so proper oversight and enforcement will likely always be a problem.

Clearly, globalization is the shape that trade will continue to take in the future. Without proper regulations and enforcement mechanisms, we will be setting ourselves up for possibly serious environmental and quality of life problems on a global scale.  It is a mistake to think that unfettered free trade can solve these problems.

Businesses exist with the main purpose of earning profits for shareholders. As a result, any negative effects of trade beyond those that are immediately apparent are likely not to alter business practices in a manner that serves the greater good. Large, powerful companies in conjunction with weak or corrupt governments will not solve the problems affecting the world.

The argument is often made that greater trade will lead to:

  1. increased wealth for the poor
  2. the sharing of newer and better technologies
  3. and greater environmental protection

However, there are already too many examples to the contrary.

Any immediate or short-term benefit to the human environment resulting from increased trade is likely to be offset by an overall decrease in the health of ecosystems, the biosphere, and our children’s health and quality of life.

Chris Watts currently serves as an Environmental Regulation Expert at Actio Corporation in Portsmouth, NH.  He is pursuing advanced studies in Environmental Science at Johns Hopkins University, Baltimore, MD.

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