Introduction
International free trade and environmental protection have appeared mutually exclusive in the modern world. This has been more the case at the turn of the decade of the 1990s with the adoption of the General Agreements on Tariffs and Trade (GATT) in the Uruguay Round and the subsequent establishment of the World Trade Organization in the year 1994. Liberalization in trade has been touted as a major force of enhancing the economic welfare of the world. At the same period, there arose the concept of sustainable development which emphasizes on the environmental protection and the issue of sustainable development gained currency in the United Nations Conference on Environment and Development in the month of June the year 1992. More so, this concept of environmental protection was further stressed in the Rio Declaration. The doctrine of international free trade is characterized by policies of open markets, increased industrialization, free market and competitiveness which pose a threat to the environment. As highlighted, the General Agreements on Tariffs and Trade (GATT) stand as one of the major legal underpinnings of free trade and the provisions of this legal instrument have the force of undermining environmental protection. Indeed, the interpretation accorded to the provisions of the GATT confirms the position that these two concepts are in conflict in real practice. Though it is acknowledged the world over that the concepts of free trade and sustainable development are mutually supportive, it is the case that the two are constantly in conflict. However, this paper argues that despite this dispute between the two concepts, international free trade and environmental protection can be compatible, and are indeed compatible concepts, if viewed from the perspective of sustainable development. To demonstrate this, this paper begins with an exposition of the concept of international free trade. In the next section, the paper equally examines the concept of environmental protection and highlights the conflict that exists. In the final section, this paper seeks to explain how the two concepts are interrelated and how they are compatible if viewed from the sustainable development point of view.
Over the last several years, the world economy has been shaped by the concept of free trade. It is common both in parlance and in practice the world over, that free trade is essential for the reengineering of the world economies and a contributor to an improved standard of living. Two policies have been advanced as the shapers of the economy namely protectionism and free trade. While free trade as a policy emphasizes on the absence of government intervention on the trade market, protectionism as a policy revolves around the actual involvement of the government in the protection of the home markets from foreign competition. The concept of free trade was argued by David Ricardo in the 19th century when he propounded the doctrine of comparative advantage. Ricardo argued that if a particular country was able to produce a certain product in an efficient way and was not efficient in another, it should so produce that which it is able to produce in an efficient manner. Ricardo further stated that such a country ought to buy the other product which it is unable to produce efficiently. In short, he was making the case that global wealth is increased though free trade when countries use their resources in the most effective and efficient manner. In the absence of protectionist measures which may close the market, market competitiveness determines the prices of goods since the government has no intervention in the market. This has the end effect of benefiting the consumer who is at the end of the food chain as he is able to enjoy the lower prices of goods resulting from competition for goods. Upon the onset of the 20 the century, most countries led by the United States started advocating for free trade as they had become industrialized and they wanted to take advantage of the global market. They called for the giving up of protectionist measures adopted by some of the countries which were trying to protect their home industries. At the same time, industrialized nations that had hitherto advocated for free trade changed their trade policies and adopted the protectionist measures in an effort to protect their markets from intense foreign competition. The protectionist measures were discarded by most countries after the Second World War and the International Monetary Fund and the current World Bank were created with the aim of promoting monetary stability. Next were the formation of the United Nations in the year 1945 and the subsequent enactment of the GATT which remains the major governing of instrument of international trade to this day. The main role of the GATT is to promote international free trade which features competitiveness, industrial development and economic growth. It is the case that the adoption of the measures of free trade has had a negative effect on the environment. There is a disquiet among environmentalists that at a time when environmental protection should be the main talking point, the continued measures of free trade that are being pursued continue to damage the already fragile ecology. Environmentalists are of the view that the provisions and the rules of GATT are the cause of destruction of the global environment.The natural resources of the world have been damaged to the point that they are unable to sustain economic development. It is beyond controversy that environmental protection remains one of the key objectives in the world. Being the case that both free trade and environmental protection are well known realities, there is need for an intersection between these two concepts and considers their compatibility. We argue that since free trade aims at maximizing the global wealth of the economies, it follows that this acts as a motivation for the efficient use of the natural resources. However, we need be fully aware that international free trade may promote competitiveness towards regulations and protection mechanisms of the environment that are less stringent. The upshot of this is that industries may then migrate to other countries which have lower environmental standards so as to benefit from the wealth that accrues from the free trade. Nonetheless, empirical studies show that this apprehension has been somewhat allayed by the fact that the environment cost differences are minimal owing to the adoption of similar environmental standards. In addition, the environmental compliance costs constitute only a small fraction of the production costs.
As international free trade leads to increased production and the enhancement of consumption, there may be damage to the environment without the option of either the consumer or the producer being obligated to pay for the damage. We argue that international free trade and environmental protection are compatible concepts if viewed through the concept of sustainable development. Sustainable development can serve to explain and provide an intersection between trade and environmental protection. Sustainable development emphasized on the idea of achieving economic development through trade and the employment of environmental friendly methods. As a consequence, international free trade prospers leading to economic development while at the same time taking care of the environment. This doctrine essentially makes the case that both qualitative and quantitative development can be achieved without casting a dent on the protection of the environment. Sustainable development entails the respect for environment in achieving both current and future economic development, for posterity. The Rio Declaration that was made in the year 1992 at the United Nations Conference on Environment and Development in the Earth Summit was to the effect that the participating states would cooperate in promoting an international system of supporting economic growth and sustainable development so as to address environmental degradation. In answering the question as to whether both international free trade and environmental protection are compatible, we need understand the policy of sustainable development and how the same is achievable.
We begin from the premise that sustainable development holds that both trade as well as environmental protection measures aim at achieving economic efficiency. Indeed, environmental policies agitate for economic growth which consumes few natural resources in an efficient manner. On the other hand, free trade policy through the doctrine of comparative advantage explained above, support is accorded to countries that are able to produce certain products efficiently thereby leading to low prices for the goods and services. The compatibility between free trade and environmental protection therefore is that an efficient use of the natural resources leads to lower prices for goods and consequently comparative advantage. As such, there is the enhancement of trade as well as the protection of the global environment, both of which are achieved in an efficacious manner while respecting the rights of the posterity. We then examine methods through which sustainable development may be achieved. One of the initial ways through which government can encourage individuals as well as enterprises in adopting measures of sustainable development is through the provision of information that appeals to the goodwill of the people. We however argue that this method may not yield the desired results since the mere provision of information is deficient of the legal force of enforcement. As a result of this, government has made use of legislation in a quest to promote environmental protection. Some of the methods that have been used to achieve sustainable development have included environmental regulation in areas of pollution control as well as the imposing of fines, prohibitions and trade restrictions. Another method has been price incentives in the form of taxes and subsidies where activities that are friendly to the environment are cheaper while those that are hostile to the environment are expensive.
A number of key fundamental principles have been listed under the GATT in its quest to achieve international free trade. At first, the principle of the Most Favored Nation Treatment (MFN) is to the effect that in the event that a member country offers a concession to one country, it must so offer to all the other GATT member counties. The import of this is to alleviate any discrimination. The second principle of National Treatment is to the effect that all imported products are subject to similar legislation and taxation. The third principle is one that proscribes the protectionist measures and calls for imposition of tariffs to promote transparency in regulations of the member countries where protectionism so exists. In order to achieve compatibility between environmental protection and free trade, the process of trade liberalization must be paralleled with the strengthening of effective environmental regulation. These policies designed to protect the environment could in turn avail the much needed motivation for innovations in technology, promotion of economic efficiency and an overall improvement in productivity. Further, there is need to sure that the rules of trade do not entangle but rather promote the ability of countries to develop and maintain adequate environmental measures.
In addition, trade policy also has a crucial role to play in the support of sustainable trade flows and specifically, environmental friendly trade. Trade tools can be instrumental in achieving tangible progress towards better and more sustainable consumption and production patterns. Further, there is also need for an active development of economic instruments with a view to allowing for the required internalization of the environmental costs. There is a further need to consider synergies between the environment, trade as well as development with respect to the elimination of environmentally damaging subsidies as well as the promotion of environmental friendly goods and services. Though environmental regulations that are applied to industries may tend to raise the costs of production and as such reduce the competitiveness of the particular exporting country, we argue that there is a lowering of the overall costs in the long run. The costs increase which may accrue owing to factors such as zoning and polluter pay charges may be lowered further through energy savings and resource recovery. As highlighted elsewhere in this paper, there is a move towards the international harmonization of regulations and standards thereby doing away with the concern of the costs involved.
Conclusion
In conclusion, we argue that international free trade and environmental protection though conflicting concepts owing to their different interests are compatible if seen in the light of sustainable development. This is because the chief aim of both concepts is economic development while securing the natural resources, which defines sustainable development.
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