Factor Mobility, Agriculture, Environment and Quantitative Studies
Edited by Miroslav N. Jovanović
Chapter 12: The Differential Impact of Economic Integration on Environmental Policy
Jale Tosun and Christoph Knill 1 INTRODUCTION In the last three decades, a growing number of both industrialised and industrialising countries have decided to open their economies and conduct liberal trade policies. The launching of multilateral trade regimes, such as the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), further intensified the economic interactions between countries. Complementary to multilateral regimes, regional integration, such as the North American Free Trade Agreement (NAFTA), has proliferated, and has even led to the creation of a political union as the case of the European Union (EU) shows. While the acceleration of international trade was initially regarded against the background of industrial development and income growth, gradually concerns emerged about negative impacts on the environment. The focus of this discussion has been on whether countries engage in an environmental ‘race to the bottom’ by deliberately setting environmental protection standards at low levels to attract international capital (Ferrantino, 1997, p. 48). This scenario has been associated with a loss in the level of environmental quality and consequently with an increase in social costs. Policy makers in industrialising countries, by contrast, have expressed fears that the links between trade policy and environmental policy are used by industrialised countries to erect barriers to trade (Copeland and Gulati, 2006, p. 178). These concerns are currently, for instance, present in the public debate surrounding the creation of the Free Trade Area of the Americas (see Deere and Esty, 2002) and a frequent object of dispute...
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