Will environmentalism become the new protectionism? Twenty-three experts weigh in

International Economy, The, Summer, 2007

The way the question has been posed to us to answer, especially the statement that China and India are making a "conscious" trade-off between raising their living standards at the cost of an increasingly "degraded" environment, sums it up. The prime goal for most countries is to raise the living standards of their citizens. If we in the so-called Developed West think we can persuade them, there might be a better balance to achieve it. Let's join them as an equal partner to regularly discuss these and many other issues.

Recent debates in the wake of the G8 summit leave the impression that environmental standards are to be used as an excuse for protectionist policies. The strategy of the U.S. president who refused to make any clear-cut commitments without the inclusion of China contributed to this line of thinking. Nevertheless, it would be very unwise to restrict trade with countries that have problems meeting environmental standards. The first and obvious reason is that these kinds of trade limitations would impair growth and employment. After all, trade is a source of wealth.

Moreover, it is likely that global environmental standards will not be raised by protectionist behavior. Trade limitations on one side incite retaliations on the other. As a result trade becomes more expensive and the price level increases. Why should countries that are made poorer by protectionism be more ready to improve their environmental standards?

There is a more positive strategy. Economies should enhance trade in environmental technologies. Sophisticated machinery that allows sustainable production without polluting the environment should be in high demand, especially in countries that face environmental problems. The same applies to technologies that clean up an already polluted environment. Economies supplying these technologies benefit from higher growth and those buying them benefit from an improved environment.

What will happen? There are good reasons to believe that the latter strategy has at least a fair chance. Even in China, politicians are well aware of their environmental problems. Chinese economic growth will only become sustainable if environmental standards are raised. There are firms in the United States and Europe that could help China achieve this aim. Trade pays.

SUSAN ARIEL AARONSON Professor, George Washington University School of Business, and author (with Jamie Zimmerman) of Trade Imbalance: The Struggle to Weigh Human Rights in Trade Policymaking (Cambridge University Press)

Environmentalism is not the new protectionism. Instead, policymakers are developing a new equilibrium that allows them to work toward sustainable development without distorting trade. The WTO system is playing a helpful role, by showing how WTO member states can balance their trade and environmental objectives. For example, on June 12, 2007, the WTO dispute settlement body ruled in favor of the European challenge to Brazil's ban on used and retreaded tires. Brazil had banned the import of these tires, because these tires could not be safely disposed of. These used tires had been dumped throughout Brazil and, in turn, became breeding grounds for disease-carrying mosquitoes. The WTO panel found that Brazil's ban on imported tires could be justified based on public health concerns; however, Brazil had not done so in a non-trade distorting manner. Brazil expressed satisfaction with the decision and then agreed to alter its policies so as not to distort trade. That response signaled to me that countries are gradually finding ways to reconcile their trade and environmental objectives. In a world where policy choices are rarely black and white, green need not be discordant.