Conflicting Perspectives in Trade and Environmental Negotiations
29 Pages Posted: 8 Oct 2002
Date Written: September 2002
International trade negotiations have recently tackled the issue of possible free trade restrictions, justified - among others - on the basis of environmental concerns. Also, some analyses of international environmental agreements (especially in the field of climate change) have highlighted the key role played by changes in the terms of trade in determining the cost of environmental policies. Yet, secondary effects of international trade remain disregarded in many environmental policies, whereas the introduction of environmental trade barriers has been resisted, arguing that this may hide a Trojan horse of a renewed protectionism.
This paper reviews the debate on trade and the environment in the two fields of environmental and trade negotiations, highlighting the different and somewhat conflicting approach adopted in the two cases. A numerical general equilibrium model is used to illustrate how different "perceptions" (translated in terms of alternative model closures) affect the use of instruments, the distributional impact of the various policies, and the strategic interplay between negotiators in international agreements.
Keywords: Trade Policy, Environmental Policy, Climate Change, General Equilibrium Models
JEL Classification: F18, C68
Suggested Citation: Suggested Citation