Evaluating the effects of world trade agreements on the environment

Increased public awareness and concern for the environment has led to a rapid expansion in national and international environmental regulatory measures and policies, which has focused attention on the interface between international trade liberalisation policy and environmental policy. The objective of the further World Trade Organization (WTO) negotiations should be to achieve consistency and the maximum synergy between trade and environmental policies. To achieve this, will involve addressing a number of specific issues concerning the relationship between WTO rules and environmental policies which relate to international trade.
The environmental impacts on developing and least developed countries of world trade agreements are highly case-specific and the net result from negative and positive effects cannot be predicted with certainty. Trade liberalisation can contribute to sustainable development if accompanied by appropriate environmental and regulatory policies. However, the risks that developing and least developed countries will lack the resources and regulatory capacity to ensure that their production and trade meet the required environmental standards, and may suffer disproportionately, therefore, from the application of trade-related environmental measures, are considerable. While the WTO and other multilateral bodies are committed to providing financial and technical assistance to states that have difficulties in meeting their international commitments, the effectiveness of such provisions is as yet undetermined.

The global impact of achieving greater clarity between trade and environment policy at the multilateral level will depend on the terms of agreement reached. The distribution of impacts is also difficult to predict, in part, because some of the gains will be in terms of the enhanced protection of 'global commons'. In the developing and least developed countries, the realisation of environmental gains is likely to be linked to negative economic impact, at least in the short and medium term. Non-trade distorting mitigation measures will need to be identified and applied if these potential adverse economic effects are not to act as a brake on reaching agreement within the WTO on the use of trade measures for environmental policy purposes.

1. The global environmental impact of a clarification of the rules is likely to be positive in the intermediate scenario, but the distribution between country groups is difficult to assess. Gains can be expected to be larger in the liberalisation scenario, provided that clarification of the compatibility between WTO rules and trade measures taken pursuant to environmental policies has been resolved and the agreed principles are applied.

2. For the developing and least developed countries, the clarification of rules could have a positive environmental effect, but a negative social and economic impact, at least in the short and medium term. This emphasises the role of international coherence and coordination in providing resources and technical assistance to enable developing and least developed countries to meet environmental standards and rules applied to traded goods and services, and becomes particularly important in the liberalisation scenario.

3. The full liberalisation scenario could lead to increased economic gains and environmental losses. If, however, environmental rules were effectively applied, there could be a net environmental gain, with the elimination of subsidies which encourage over production and over-use of pollution-intensive and resource-intensive products.

Type Classification:
F: Exceptional strategies
Related UN Sustainable Development Goals:
GOAL 4: Quality EducationGOAL 15: Life on LandGOAL 16: Peace and Justice Strong Institutions