International Trade and Environment Standards

Abstract

Environmental standards largely determine the flow of the international trade. There has always been a debate about whether trade liberalisation and environment protection should be integrated or should there be free trade where the two agendas of trade liberalisation and environment protection are independent of each other. However, it turns out that what is actually needed is an efficient and effective policy instrument to deal with the environment protection issues.  Although there is no doubt that that environmental standard does play a role in deciding the flow of international trade but just focusing on the trade policy implies ignoring other market failures that affect the environment. There is therefore a need to integrate the two agendas of trade liberalisation and environment protection. This paper explains the various challenges faced in integrating the two agendas and the further work that needs to be done in this area.