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In December of 1999, the street of Seattle erupted into violent protests as the World Trade Organization attempted to set its priorities for future trade liberalization. Four months later, the streets of Washington, D.C. also filled with protesters in response to meetings of the International Monetary Fund (IMF) and World Bank in April of 2000.[1] Since Seattle, strict security precautions are required for any high-level meeting on international trade. [2] This anti-globalization movement sees “free trade” as the source of many of the world’s problems, including problems with the environment and poverty. [3]
A website put up by the “Global Exchange,” an anti-globalization group lists its “Top Ten Reasons to Oppose the World Trade Organization.” This top ten list reads as follows: [4]
1. The WTO only serves the interests of multinational corporations 2. The WTO is a stacked court 3. The WTO tramples over labor and human rights 4. The WTO is destroying the environment 5. The WTO is killing people 6. The US adoption of the WTO was undemocratic 7. The WTO undermines local development and penalizes poor countries 8. The WTO is increasing inequality 9. The WTO undermines national sovereignty 10. The tide is turning against free trade and the WTO!
The World Trade Organization has responded to these criticisms on its own website, with it page entitled “10 common misunderstandings about the WTO.”[5] I do not respond to each of these criticisms in this paper. Rather, since the environment seems to have a particularly high priority for the anti-globalization movement, this paper focuses on the argument that free trade threatens the environment.
The Global exchange makes its environmental claim in the following manner:
The WTO is being used by corporations to dismantle hard-won environmental protections, which are attacked as "barriers to trade". In 1993 the very first WTO panel ruled that a provision of the US Clean Air Act, requiring both domestic and foreign producers alike to produce cleaner gasoline, was illegal. Recently, the WTO declared illegal a provision of the Endangered Species Act that requires shrimp sold in the US to be caught with an inexpensive device allowing endangered sea turtles to escape. The WTO is currently negotiating an agreement that would eliminate tariffs on wood products, thus increasing the demand for timber and escalating deforestation. [6]
While most of us would love to see the pristine environment observed by Lewis and Clark as they explored the American west in the early years of the nineteenth century, the entire world population at that time was still less than one billion people. [7] With a world population which has increased six fold over the last two hundred years, the reality is that massive resources are required to simply feed and clothe this increasing population. A return to the simpler methods of production which were used in the past would simply mean mass starvation.
Given the reality that we must support that world’s current and growing population, the question that we must answer is whether free trade offers hope for the world to find environmentally friendly ways to support itself, or is free trade a course which will lead us to environmental destruction?
Environmental protection requires a long-term perspective. Whether it be concern about global warming, which could result in environmental disruption decades from now, or whether it be cleaning up air and water, because pollution could result in cancer or heart disease, these are concerns that demand a nation’s long-term commitment of resources. However, these cannot be the primary concerns of people who are unsure about the source of their next meal.
The United States established the Environmental Protection Agency (EPA) in 1970. Over the last three decades the quality of air and water in the United States has improved significantly. [8] Gone are the days of rivers burn and Great Lakes die. A wealthy nation like the United States has the long-term resources to address its environmental problems. But, what about the poor countries of the world?
In the year 2000, the United States had per capita GDP of $36,200.00. In contrast, Sub-Saharan Africa’s population giant, Nigeria, had per capita GDP in 2000 of only $950. Even South Africa, which is Africa’s wealthy nation, had per capita GDP of only $8,500.00. Despite the well publicized economic growth of China since the 1970s, per capita GDP in 2000 was one tenth that of the United States at $3,600. [9] Most of the world is trying to simply put food on the table. Despite rhetoric, and global treaties promising a clean environment, poor countries when faced with the choice of food or a clean environment, are not likely to opt for a clean environment. Why worry about cancer twenty years from now, when you cannot find food to eat today?
As explained in my paper on comparative advantage, free trade and market economies offer the best opportunity for economic growth. Without economic growth, the poor nations of the world simply lack the resources to effectively address environmental problems. This includes environmental problems as basics as human waste disposal.
Over the last decade, market forces have also shown additional promise for addressing environmental problems. The United States has begun using market incentives as part of its environmental protection program:
· Trading of sulfur dioxide allowances in the Acid Rain program, which encourages utilities to find least cost compliance strategies; · Subsidizing farmers and others to conserve habitat and control pollution; · Basing air emission permit fees on the quantity of emissions and charging for the disposal of industrial effluents in water treatment plants; · Requiring a deposit on beverage containers to encourage recycling, which now occurs in ten states; many states have a similar system for lead acid batteries; · Charging for natural resource damage caused by oil and hazardous material spills, a liability approach to encouraging pollution prevention; · Encouraging reductions in toxic emissions by broadly disseminating information about emissions through hazard warning labeling and in communities through the annual Toxics Release Inventory; and, · Promoting voluntary programs such as Energy Star, Waste Wise, XL and other programs that reduce pollution by assisting and rewarding voluntary actions to reduce energy use and limit pollution. [10]
The EPA believes that these market based incentives offer a more effective method of addressing environmental problems.
Economic incentives offer several advantages that make them attractive environmental management tools. First, economic incentives, in some circumstances, can be structured to achieve larger reductions in pollution than would result from traditional regulations. Second, economic incentives often can control pollution at lower costs than can traditional regulations. Third, the use of economic incentives, in contrast to that of traditional regulations, can more easily control pollution generated by a multitude of small and dispersed sources. Fourth, economic incentives can stimulate technological improvements and innovations in pollution control in situations where traditional regulatory mechanisms may not. [11]
Effective environmental protection is dependent on the ability of a nation to allocate long-term resources to environmental protection. Wealthy nations are thus much more capable of protecting the environment than poor nations. Because free trade and market economies offer the best hope for economic growth, they also offer the best hope for environmental protection, while still providing the earths population with the necessities of life. In addition, the United States has shown over the last decade that market forces can actually be used to directly promote environmental protection. Thus, Markets are not a threat to environmental problems, but are our best hope for solving these problems. |
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[1]
Lowther, William, “10,000 battle with police in
shadow of the White House; [2] “Chretien dismisses security worries but hedges on Canadian site for G-8,” AP Worldstream, July 12, 2001. [3] Miller, Sara B., “Radicalism Reborn,” The Christian Science Monitor, August 30, 2001. [4] http://www.globalexchange.org/economy/rulemakers/topTenReasons.html. [5] http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m00_e.htm. [6] http://www.globalexchange.org/economy/rulemakers/topTenReasons.html.
The WTO has responded as follows:
The preamble of the Marrakesh Agreement Establishing the World Trade Organization includes among its objectives, optimal use of the world’s resources, sustainable development and environmental protection. This is backed up in concrete terms by a range of provisions in the WTO’s rules. Among the most important are umbrella clauses (such as Article 20 of the General Agreement on Tariffs and Trade) which allow countries to take actions to protect human, animal or plant life or health, and to conserve exhaustible natural resources. Beyond the broad principles, specific agreements on specific subjects also take environmental concerns into account. Subsidies are permitted for environmental protection. Environmental objectives are recognized specifically in the WTO agreements dealing with product standards, food safety, intellectual property protection, etc. In addition, the system and its rules can help countries allocate scarce resources more efficiently and less wastefully. For example, negotiations have led to reductions in industrial and agricultural subsidies, which in turn reduce wasteful over-production. A WTO ruling on a dispute about shrimp imports and the protection of sea turtles has reinforced these principles. WTO members can, should and do take measures to protect endangered species and to protect the environment in other ways, the report says. Another ruling upheld a ban on asbestos products on the grounds that WTO agreements give priority to health and safety over trade. What’s important in the WTO’s rules is that measures taken to protect the environment must not be unfair. For example, they must not discriminate. You cannot be lenient with your own producers and at the same time be strict with foreign goods and services. Nor can you discriminate between different trading partners. This point was also reinforced in the recent dispute ruling on shrimps and turtles, and an earlier one on gasoline. Also important is the fact that it’s not the WTO’s job to set the international rules for environmental protection. That’s the task of the environmental agencies and conventions. An overlap does exist between environmental agreements and the WTO — on trade actions (such as sanctions or other import restrictions) taken to enforce an agreement. So far there has been no conflict between the WTO’s agreements and the international environmental agreements. http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m04_e.htm.
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