Economic Analysis of the Environment and Trade (1)
- Environmental policies and trade policies -

Author Name YAMASHITA Kazuhito  (Senior Fellow, RIETI)
Creation Date/NO. October 2009 09-J-028
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In this discussion, we analyze the following issues with regard to the environment and trade.

(1) How reasonable is the "win-win" argument that trade and the environment have a mutually favorable impact in comparison with the argument that trade has an unfavorable effect on the environment?

(2) What kinds of problems will arise if trade policies are used on behalf of environmental policies (e.g., the case in which protectionist trade policies are used for the purpose of protecting the environment), or if environmental policies are used as an alternative to trade policies, as environmental regulations affect competitive conditions? (The latter is particularly important. As tariffs have been lowered through consecutive negotiations of GATT and the WTO, policies other than trade are being used as alternatives to tariffs. The TBT Agreement and the SPS Agreement are responses to this trend.) In addition, what are the second-best policies?

(3) Is the pollution haven hypothesis reasonable? This states that if competition with overseas products increases through trade, industries will move to countries with more lenient environmental regulations from those with stricter regulations. Conversely, how does trade affect environmental policies?