World Trade Rules and Environmental Policies: Congruence or Conflict?

INTRODUCTION(1)Proposition 1: Protection of the environment has become exceedingly important, and promises to be more important for the benefit of future generations. Protecting the environment involves rules of international co-operation, sanction, or both, so that some government actions to enhance environmental protection will not be undermined by the actions of other governments. Sometimes such rules involve trade restricting measures.Proposition 2: Trade liberalization is important for enhancing world economic welfare and for providing a greater opportunity for billions of individuals to lead satisfying lives. Measures that restrict trade often will decrease the achievement of this goal.These two propositions state the opposing policy objectives that currently pose important and difficult dilemmas for governments. This type of "policy discord" is not unique; there are many similar policy discords, at both the national and the international levels, that governments must confront.(2) Indeed, there is some evidence that environmental policy and trade policy are complementary, at least in the sense that increasing world welfare can lead to citizen demands and governmental actions to improve protection for the environment. The poorest nations in the world cannot afford such protection, but as welfare increases protection becomes more affordable.(3)An unfortunate development in public and interest group attention to trade and the environment is the appearance of hostility between proponents of the two different propositions stated above. The hostility is misplaced because both groups will need the assistance and cooperation of the other group in order to accomplish their respective policy objectives. Of course, some of this tension is typical of political systems. Political participants often seek to achieve opposing objectives and goals. Each side may endorse legitimate goals, but when the goals clash, accommodation is necessary.To some extent, the conflicts between the trade liberalization proponents and the environmental protection proponents derive from a certain "difference in cultures" between the trade policy experts and the environmental policy experts. Oddly enough, even when operating within the framework of the same society, these different "policy cultures" have developed different attitudes and perceptions of the political and policy processes, and these different outlooks create misunderstandings and conflict between the groups.(4)These problems are part of a broader trend of international economic relations that is posing a number of perplexing and troublesome situations for statesmen and policy leaders. Part of the difficulty inevitably results from the growth of international economic interdependence.(5) Such interdependence increases trade in both products and services across national borders and brings many benefits to participating countries. International interdependence also results in efficiencies and economies of scale that can raise world welfare (but not necessarily everyone's welfare, because some groups will be required to adjust in the face of increased competition).(6) This trend towards increased international economic interdependence requires a different sort of attitude towards government regulation. Within a nation, government regulations in such areas as consumer protection, competition policy, prudential measures (of banking and financial institutions), health and welfare (for example, alcohol and abortion control), and human rights (for example, prohibiting discrimination), are all designed by governments to promote worthy policies that sometimes clash with market oriented economic policies. When economic interdependence moves a number of these issues to the international scene, they become (at least in today's defective international system) much more difficult to manage. The circumstances and the broader scope of the international system create in many contexts (not just those concerning environmental policies) a series of problems and questions including:--General questions of effectiveness of national "sovereignty" in the face of a need to cooperate with other countries to avoid some aspects of the "prisoners dilemma"(7) or "free rider"(8) problems. …