Is Free Trade Good for the Environment?
by Henry Camp

 

Free trade has become an unpopular policy of late. Right-wing populism has exploded across the globe, with leaders vying to put their own country first and sever their free trade agreements – Brexit being the first hard-edged example we’ve seen. The left has seen similar changes, with Bernie Sanders leading a progressive movement that aims to relieve Americans’ frustration with jobs moving overseas. He, like our current president (or at least, like the statements our current president has made), strongly opposes the North American Free Trade Agreement (NAFTA).

In short, free trade is a policy in which countries agree not to restrict imports from and exports to other countries. Many environmentalists have long criticized it for polluting the world and contributing to global warming. It increases transportation distances on goods, racking up emissions (international marine transport, the predominant method of trade, contributes 8.6 per cent of the emissions of the transport sector)[1]. This alone has huge impacts, and there are few signs of these impacts lessening in the near future, as no competitive green alternatives exist for gas-guzzling cargo ships, jet plans, and 18-wheelers. Trade also requires the transportation of toxic materials that threaten environmental disaster should their vessel spill [2]. Furthermore, opponents claim that global markets allow multinational corporations to take advantage of countries with laxer environmental policy in both green and brown issues, creating “race to the bottom” and “pollution haven” phenomena. And in general, free trade allows developing worlds to further develop, which inherently increases pollution and greenhouse gas emissions, even when developing countries make attempts to develop using green standards.

However, I wanted to see the other side of the coin. Economists do extensive research to back their claims on the greatness of free trade as a solution to global poverty, so I was curious to see what they had found on globalization’s carbon footprint.

The primary response identifiable in the literature is refuting the “race to the bottom” and “pollution haven” hypotheses. These hypotheses are based on the idea that in a global market, corporations will relocate to countries with weaker environmental regulations so that they can save money and pollute more. Trade proponents claim that environmental regulations do not pose a large enough economic burden to influence a corporation’s decision to move [3]. Transportation costs, labor market conditions, and capital abundance tend to have greater influence, writes Daniel Benjamin, a Senior Fellow at the Property and Environment Research Center[4]. Additionally, it is often cheaper for production to be standardized within a company, so the company with a plant in the US and another in a pollution haven will use the same production methods at both plants, even if that means following the US environmental standards. According to this theory, innovative technologies themselves are in a sense traded across the globe, allowing developing countries greater access to clean technologies than they would have without free trade.

Many economists also claim that since trade increases a country’s economic output, the country’s residents then increase their quality of life and demand more environmental protection. A study from Antweiler, Copeland, and Taylor at the National Bureau of Economic Research found that for every 1% increase in economic activity, sulfur dioxide concentrations rose 0.3% as a direct result, but the accompanying increase in income drove concentrations down 1.4% [5]. The same researchers also found that there was no quantifiable link between producers changing locations and increases in emissions, further refuting the pollution haven hypothesis.

To combat the claims that free trade increases emissions through longer transportation distances, proponents point out that 74 per cent of CO2 emissions in the transport sector come from road transport [6]. Since 90 percent of global goods by volume are moved by sea, having your products shipped overseas from South America could be better for the planet than having them driven from California. Additionally, in odd cases such as flower production, it costs less emissions to have Kenyan flowers air-freighted to Europe than to have them grown in greenhouses in the Netherlands [7].

In no way does the debate end here. In general, evidence of free trade harming or helping the environment is foggy and complicated. I opted not to add agriculture into my discussion, as that adds a whole new range of questions and complications to the mix. It’s difficult to suggest concrete policy based on hotly contested evidence, but I currently sit in the boat that says free trade needs to stay – and expand with caution. That’s not to say that reform can’t come along the way; several legal battles have ensued over whether a country has a right to restrict imports based on the exporter’s environmentally harmful methods of production, and I believe trade agreements should be made so that the importer is given that right. But in the end, trade has lifted enough lives out of poverty that I find it too beneficial to scrap, and according to some folks, it may even be making the world a greener place.

 

Luke B. comment:
I really like this post. It is well-balanced and presents both sides of the argument. Free trade is always a very difficult subject, because of how the factors change with the product and countries involved. There are a lot of very damaging risks like the spills you mentioned, and potential introduction of invasive species. But free trade can also be very beneficial, both for the goods it provides and for the ideas and technology it spreads. For free trade to be completely beneficial it will need a lot more regulation, but if that can be accomplished without significant loss of profit the environment can benefit as well as the economy.
 

Brianna comment:
I really enjoyed this blog post, especially because I was so unaware of the theory behind free trade’s impact on the environment. So many topics, policies, activities, etc have impacts on the environment that we don’t typically attribute to being an environmental problem. The theories regarding increased emissions due to the increased transportation distances due to free trade make logical sense to me. However, the theories the argue free trade increases trade for undeveloped countries, leading to their increased emissions, doesn’t seem to be an equally logical argument in my mind. We should be encouraging innovate and development of these countries, yet should also encourage their jump towards cleaner energies, especially as developed countries have the knowledge and experience to help other countries not make the same mistakes. Therefore, while it may be true there are more emissions, I think globally we can limit the magnitude of their emissions as they advance.

 

Jack G. comment
I think there’s definitely a growing overlap between many environmentalist’s views on trade and the views of those in the nationalist-conservative camps, which is quite an odd alliance. I really liked how you looked into the different perspectives of economists and other free-trade proponents.
One point that the economists made was that business relocation was occurring not because of environmental regulation but rather a myriad of other factors having to do with labor conditions and transportation costs. It seems to me though, that countries with more relaxed labor regulations would also have more relaxed environmental regulations, so it would be difficult to isolate one from another. I’m not sure if they controlled for each variable in their study or how they could even do that. I doubt there are very many countries with a host of environmental regulations that also lack any sort of minimum wage or ability to collectively bargain.
 
Jack M. comment:
Great Post. It is fascinating to look at how policies that aren’t explicitly environmental in nature still have huge repercussions as far as pollution and climate are concerned. The rising tide of anti-free trade policy across the world makes this a very pressing issue to explore and prepare for. I like how you balanced the post with an exploration of both sides of the issue. I think your suggestion, that countries entering into trade agreements should be able to restrict imports based on other countries’ environmental records, is very important moving forward, though as global trade agreements falter, and individual trade agreements spring up, this will have to be done on a country by country basis. I also think that it is more important now than ever that wealthy countries pressure each other into compliance, and work with developing nations to ensure compliance without undue restrictions on development.
 
Tommy comment:
This post does a god job of carefully considering both sides of this issue. Free trade is certainly a complicated concept, and good arguments exist on both sides. I would consider myself in favor of free trade, however some of the inherent costs are concerning to me. I wrote my blog post on cargo shipping, and I think that negative environmental effects generated by cargo ships and perpetuated by free trade are not at all negligible. You are correct in arguing that “pollution havens” are not as significant as most think. Cargo ships are often registered in “haven” countries, but this is for economic reasons, not environmental ones. Global fuel-burning regulations make “pollution heavens” infeasible. However, increasing free trade means greater use of cargo ships, and these cargo ships produce an incredible amount of emissions, nearly equivalent to that of 50 million cars for each ship. Free trade may increase interest toward clean cargo shipping solutions though, which needs to happen anyway.
 
Wei comment:
This is a well balanced piece that addresses opinions from both sides. Environmental issues very often depict a battle between economic and environmental factors. In the case of free trade, its economic benefits to lift huge populations out of poverty is undeniable. On the other hand, there are many hypotheses on its potential harmful environmental effects. You demonstrated via evidence that many of those hypotheses are not credible or at least, not necessarily accurate. I think that environmental issues on such a large scale usually are too complicated to have a simple yes or no answer. I agree with you that we should adopt free trade with a cautious attitude. However, I believe that the ultimate solution for global warming and pollution issues, if there ever will be one, is technology improvement. As you pointed out in the blog, the lack of green transportation alternatives and the economic incentives of “pollution heaven” are some of the arguments against free trade. Technology improvements will eliminate the economic drive behind those reasons.
 
 

 
Works Cited
 

[1] “The Impact of Trade Opening on Climate Change.” WTO | Trade and Environment. World Trade Organization, n.d. Web. 18 Apr. 2017.
[2] Nicolas Korves, Inmaculada Martínez-Zarzoso and Anca Monika Voicu (2011). Is Free Trade Good or Bad for the Environment? New Empirical Evidence, Climate Change – Socioeconomic Effects, Dr Houshan Kheradmand (Ed.), ISBN: 978-953-307-411-5, InTech, Available from: http://www.intechopen.com/books/climate-change-socioeconomic-effects/isfree-trade-good-or-bad-for-theenvironment-new-empirical-evidence
[3] Benjamin, Daniel K. “Is Free Trade Good for the Environment?” Property and Environment Research Center, Spring 2002. Web. 18 Apr. 2017.
[4] Ibid.
[5] Antweiler, Werner, Brian R. Copeland, and M. Scott Taylor. “Is Free Trade Good For the Environment?” NBER Working Paper Series 6707 (1998): n. pag. National Bureau of Economic Research. Web. 18 Apr. 2017.
[6] “The Impact of Trade Opening on Climate Change.” WTO | Trade and Environment. World Trade Organization, n.d. Web. 18 Apr. 2017.
[7] Ibid.

 

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