Essay on Global Trade and Environment!

Globalisation, specially the rapid growth of global trade, has put excessive stress on the world’s environment. The use of energy required to move ever-great quantities of goods around the world has put stress on the environment.

The global competitive pressures induced by trade have put further stress on the environment. The WTO has put stress on the environment. Fur­ther stress has been put by the opening up of access to all the world’s farms, forests, rivers and wild life by more and more powerful transnational corporations (TNC).

The Pollution Effect of Global Trade:


Expansion of world trade depends on oil. Since the burning of oil generate pollution, trade produces pollution. Growth of both global trade and transport depends on oil and the pollution effect of this is staggering.

Carbon, the major global warming agent, is the major pollutant emitted by the burning of oil, Trade and transport have been major contribution to the sharp rise in carbon emission. Trade has an enormous pollution cost and has an adverse effect on the environment.

Carbon emission contributes to “the Greenhouse Effect”. As a result world temperature had risen in the past and are likely to rise in future. Aircraft emissions of nitrogen oxides produce greenhouse gas. And nitrogen oxides pro­duced by aircraft causes acid rain.

Shipping uses a low grade type of fuel that produces nitric oxide and nitrogen dioxide, which can cause acid rain and photo-chemical smog. Shipping also produces nitrus oxide, another potential greenhouse gas, as well as sulphur oxides, which cause acid rain, surprisingly enalyes, however pollution from global freight is exempt from the Keyoto protocol on green­house gas emissions.


The WTO and Environment:

The WTO has been virtually silent on the environmental issue. Its agenda shows the triumph of the rights to trade over the right of the environment. Because of its enormous power the WTO has put trade first and any influence that might reduce the power of global trade a distant second.

Two of the most notable anti-environmental decisions of the GATTAVTO involved meas­ures to save dolphins and sea-turtles. But nothing much happened in practice since restriction on use of shrimp netting which kills sea-turtles amounts to unfair trade barrier. A progressive and far-sighted measure to protect the environment was never taken by the WTO can it was supposed to hamper fewer multilateral trades.

Human Health:


Trade not only affects the natural environment but human health also. Through the world arti­ficial breast milk substitutes contribute the high incidence of child mortality. Often fatal infant diarrohoea is contracted when mothers mix the formula with unsafe water. The costs largely go unnoticed when the benefits of global trade are considered. But they are real and they must be given the same weight as the financial merits (or demerits) of over- expanding global trade.

Two Barriers to Environmental Protection:

Two of the WTO measures go against environmental protection. The first is that governments are not allowed to discriminate among foreign products or b/w foreign and domestic producers of a ‘like’ product. The second is that no environmental measure is treated as legitimate unless it is both ‘necessary’ and least trade restrictive means of achieving the desired environmental outcome. Very few environmental measures can overcome these problems.

The WTO Limits on the Spread of Environmental Technologies:

Another harmful way in which the WTO works against the environment is through the trade related intellectual property rights (TRIPS) agreement. The TRIPS agreement is a global copy­right agreement which introduced strict new rules that enhanced the intellectual property right of transnational corporation which were concerned about the loss of global sales due to prolif­eration of generic copies of their products.

Apart from protecting the market of large drug and pharma companies the TRIPS agreement also protects the market of companies that produce environment friendly technologies. Consequently developing countries like India often cannot use new technologies and improve their environmental performance.

The WTO and Global Warming:

The WTO has also failed in its efforts to stop global warming. For instance, two major car manufacturing regions of the world—the European Community and the USA—are eager to reduce greenhouse emission but does not want to lose their share of international market. So no one is able to reduce greenhouse emission for fear of deviating from free trade.

There is a strange apprehension that initiatives which reduce greenhouse emissions could undermine a country’s trade competitiveness. This, in turn, poses a serious challenge to inter­national efforts to stop global warming. There is always the danger of losing a competitive edge in the global market. This very fact seems to be the greatest single barrier to achieve lower global greenhouse emission.


In 1992 an attempt to introduce carbon tax failed for the fear of losing trade competitiveness; likewise the US opposed the ratification of the Kyoto Protocol. It was argued that signing the protocol would result in hundreds of manufacturing plants being relocated to low income countries that are not bound by the Kyoto Protocol.

Foreign Investment:

Falling investment is a huge driver of global trade and financial capital is the most mobile of all factors. In addition, it has an extra temptation to go abroad in search of higher return. Moreover, the sad truth is that the mobility of global investment has made it very easy for business to relocate to new countries to take advantage of looser environmental controls. Ac­cording, to one estimate made by the United Nations b/w 20 and 50% of all foreign investment that goes into low-income countries is invested in pollution-intensive industries.

The tragic incidence of gas leakage from Union Carbide’s Bhopal plant is the most infamous example of this opportunistic type of investment. Like India, Mexico has become a haven for foreign in­vestors—particularly US investors—who seek slack environmental regulations.


At times just the threat of relocation can be sufficient to force loose environmental control. Excess control on a falling farm by the hast government can force it to leave the country and relocate elsewhere. Such runaway factories are likely to aggravate the unemployment problem in labour surplus countries.

Investor Law Suits:

In some regional trade agreements like NAFTA the right to resort to legal action extends envi­ronmental measure. Under the NAFTA rules, if an investor feels that its rights are compro­mised by environmental measures he can take legal action in the matter. Money investors have done so in the recent past.

The Global Spread of the Environmental Impact of Trade:


Perhaps the most devastating effect of global trade is the way it makes all the world’s natural resources available for potential plunder. Trade has made all the world’s natural resources avail­able to all the world’s producers. Global trade has removed all ballwre to the exploitation of the world’s natural resources.

Some of the major impacts of this unbridled ability to exploit all the world’s natural re­sources have been the following:

(1) The world has lost half of its original forest cover b/w 1960 and 1990.

(2) By 2000, more than 75% of the world’s major marine fish stocks had either been de­pleted through once fishing or had been fished to their ecological limit.

(3) Global production of minerals has increased sharply. So mineral resources which are non-renewable have been reduced correspondingly.

(4) In the past 25 years alone the world has lost 30% of its biodiversity. It is now losing species at 10,000 times of the natural rate of extinction.


The Environmental Effect of Global Farming:

Globalisation is also increasingly opening up all the world’s farms for global exploitation. More and More of the world’s family farms are being converted to factory farms. The larger farmers use farming methods which are much more chemical and water-intensive than the methods used by the smaller farms. Both are gradually destroying the country’s scarce water resources and increasing the amount of fertilizer run-off into the seas starving marine life of oxygen.

The mushroom growth of factory farms around the world has had the following environ­mental effect:

(1) Global consumption of water is doubling every 25 years. So shortage of water is inevi­table in near future.

(2) Farming is exhausting more and more sails around the world.

(3) Farming sails are becoming less and less sensitive to fertilizer use, resulting in ever increasing qualities of fertilizer being required for the same output.


The Environmental Destruction Fuelled by Falling Raw Material Prices:

The age-old dependence of many LDCs on the export of raw materials is also a source of major world wise environmental stress. Due to declining pressure of raw materials, LDCs have to sell more and more raw materials onto the global market.

But they get less and less money as supply exceeds demand. They are constrained to sell off their natural resources at lower and lower prices because they have no other option in today’s highly integrated global market. At the end, the environment pays the price.

WTO’s Wrong Policies:

The ongoing dependency on exports of raw materials by many low income countries are rein­forced by the policies of the WTO. The policies of WTO are virtually neutral with respect to the patterns of trade of LDCs. What is worse, at times these policies work against ending LDCs’ dependency on raw material’s export.

One policy of WTO, that seeks to maintain LDCs dependency on export of raw materials its tariff escalation. During the round a schedule of tariffs was negotiated for raw materials which linked tariffs to the amount of value added to a raw material. The more valued addition was made, the higher the tariff.


This gives hardly any incentives to LDCs to add value to their export of law materials. So LDCs are left with no other option but to exploit their natural resources. They are virtually forced by the WTO to do this. That is why many cities have given the WTO a new name wrong trade organisation just as the GATT was described by its critics as gentleman’s agreement to talk and talk.

To conclude with Crreg Buckman:

“Basically free trade is getting a free trade courtesy of the world’s environmental. Both the structure and the sheer volume of world trade mean the world’s environment pays the price every time. But the global environment is finite, expanding global trade is eating away at the Earth’s natural capital-and it is a capital we cannot reinvest in. Once it is gone, it is gone forever. Global trade desperately needs to open its eyes and ears to the impact it is having on our global ecosystem”.