Trade and the Environment

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The relationship between the natural environment and free trade focuses on the trade policies’ impacts on the ecological environment, the impacts on the trade flows and the use of trade measures in order to attain environmental policy objectives (Irwin, 2009). Free trade impacts the environment drew international attention in 1991 when the Mexican government challenges United States laws on the ban of exports of tuna to the US from Mexico. The United States Marine Mammal Protection Act prohibited the import of tuna and dolphins from countries that used fishing methods that killed the dolphins (Mitchell, 2009). In its case, the Mexican government argued that the General Agreement on Tariffs and Trade (GATT) allowed free trade between the two countries. Accordingly, the World Trade Organization (WTO) outlined that countries could restrict free trade in instances when the measures are necessary to protect the safety and health of the citizens. In the ruling, GATT panel clearly outlined that the US government had violated GATT agreements since it could not utilize its domestic legislation to control and protect dolphins that were outside its territory (Geradin, 1997). This case opened new controversial issues on the impact of free trade on the environment since Mexico did not press for the implementation of the panel ruling. Thesis statement: International free trade and environmental protection can never be compatible. Free trade increases global economic activities and leads to higher national incomes. The total global trade volumes have increased significantly due to trade and the free flow of labor among the trading partners (Irwin, 2009). The growth in free trade has been supported by advancements in transportation networks, an increase in outsourcing, industrialization, and the emergency of global trade organizations. Proponents of free trade assert that it leads to efficient resource allocation due to the comparative advantage of nations in producing certain commodities. Garber (1993) asserts that free trade increases global economic output due to the expanded market for excess output and elimination of market access tariffs and regulations of the domestic economies. Accordingly, free trade encourages competition among various firms thus leading to high-quality products and low prices to the consumers. It is acknowledged that free trade will foster technology transfer that contributes to human advancements and better quality of life in society. Accordingly, free trade enables multinational companies to reduce the costs of production by attracting high qualified skill force at a lower cost and moving their manufacturing plants closer to sources of raw materials (Michalos, 2008). In addition, free trade will contribute to growth in the domestic gross product by ensuring higher employment levels and consumer incomes thus ultimately contribute to increasing consumption levels in the economy. However, environmentalists assert that free trade leads to market externalities like pollution and thus stringent domestic environmental regulations are necessary in order to check the standards of goods imported in the economy (Esty, 1994). The WTO established a committee to deal with trade and environment in 1995 in order to deal with issues concerning domestically prohibited goods and eco-labeling. A major concern for the committee is the relationship between multinational environmental agreements(MEAs) and WTO regulations since the environmental agreements entail provisions that restrain the signatory countries to ban the importation of certain goods