A Trade-Off Between Trade And Environmental Issues - Case Study Example

Economists, policymakers and business organizations and owners alike have, for decades, debated the role of international trade in determining environmental outcomes (Antweiler, Copeland and Taylor 2001, p. 877) and such debates are often times heated. From these debates, economic theories on the trade-off between trade and the environment emerged. One such theory is the "pollution haven hypothesis that suggests relatively low-income developing countries will be made dirtier with trade" (Antweiler, Copeland and Taylor 2001, p. 877). On the other hand, the empirical works of others have disputed the fundamentals of the pollution haven hypothesis.

Others claim that the international trade policy of a country affects how the trade will impact the domestic environment, and trade alone is not to blame for environmental degradation (Bhagwato and Srinivasan 1996). As countries embrace free trade, the economic managers and policymakers of that country design trade policies which can either break or make the country's future as a global trade player (Driesen 2004). These policies and the way the environment was factored into them will have a significant impact on the direction of change that will happen in the country's natural environment.

Trade policies can be designed to protect or exploit the natural resources of a country. This fact is the reason why trade organizations such as the World Trade Organization have taken global climate and global trade, together, as part of their agenda. The World Trade Organisation which is the institution that "embodies the multilateral regime of rules governing international trade" (Frankel 2005, p. 9) was formed in 1995. WTO is the direct result of the Uruguay Round and eight years of negotiations among concerned nations.

The WTO and other similar multilateral organizations have acknowledged the interconnectivity of trade policies and environmental policies.