Question

1. Is free trade necessarily at odds with tackling climate change? (Please discuss the answer within 800 words - at most 1000 words! Thanks!)

Answer 1

Analysis of the impact of trade agreements on environmental goals dates back to the early 1990s. At the time, trade liberalisation was surging alongside a broad uptick in globalisation, as the Soviet Union disintegrated and a technological revolution cut the cost of transport and communication across borders. After the US, Canada and Mexico signed the North American Free Trade Agreement (NAFTA) in 1992, Grossman and Krueger identified three “mechanisms of action” through which trade agreements could indirectly affect environmental outcomes.

Liberalisation ordinarily builds exchange streams via ocean, air and land, just as boosting more extensive monetary action. In a the same old thing situation, this will build asset exhaustion, contamination and outflows (dispatching alone records for 2–3% of worldwide GHGs

Exchange understandings urge countries to practice as indicated by their near preferred position, which might be pretty much outflow escalated. For example, producing in Malaysia is twice as carbon-escalated, and in Vietnam multiple times as carbon-serious, as in the US. On the off chance that exchange understandings move creation to additionally polluting geologies, worldwide outflows will increment.

Outflows and contamination may fall if exchange advancement supports global partnerships to move cleaner advances to creating nations. However, procedure impacts can likewise be atmosphere negative—for instance, if petroleum gas fares or non-renewable energy source extraction increment attributable to the dissemination of pressure driven breaking innovation or inventive oil investigation hardware.

Trade–climate policy conflicts are not hypothetical. Canadian trade officials opposed an EU effort to label tar sands as a “highly polluting” energy source in its Fuel Quality Directive rules (the classification was eventually dropped). The US lambasted an EU definition of renewables that restricted US exports of soybeans as a biofuel feedstock as a “barrier to trade”. Governments have invoked the WTO settlement mechanism to challenge renewable energy policies in China, India, Canada, EU member states and the US, on the grounds that subsidies and domestic prioritisation violate free trade principles. Investment liberalisation agreements, which can be incorporated into trade deals or signed as standalone agreements, have also been invoked to contest climate and environment policies. For example, the governments of Germany, Canada and the US have faced legal action from companies for environment-related regulatory changes and decisions on water pollution, hydraulic fracturing, and an oil pipeline, respectively.

Trade agreements can be established among developing countries, developed countries or between developing and developed countries. Depending on the level of income of the countries involved in the FTA, different hypotheses about the effect of FTAs on GHG emissions have been developed.

The first hypothesis is the Pollution haven hypothesis (PHH), developed by Johnson and Beaulieu (1996). This hypothesis assumes that developing countries will have more pollution after an FTA because of their lax environmental regulations, as polluting industries will relocate from countries with strict environmental regulations to developing countries. Korves et al. (2011) found that developing countries tend to become producers of more pollution-intensive products. According to the environmental Kuznets curve principle, environmental damage increases in the early stages of growth but diminishes once nations reach higher levels of income.

The second hypothesis is referred to as the factor endowment hypothesis (FEH). Based on this hypothesis, trade flows are determined by the amount and type of resources owned by trade partners, consistent with the Heckscher- Ohlin- theory of comparative advantage. Developed economies are often endowed with physical capital while emerging economies are typically endowed with labour capital.Thus, developing countries tend to produce more labour-intensive goods while developed countries tend to produce more capital-intensive products that require more energy use (Copeland & Taylor 2013). As a result, FTAs may render developed countries with more pollution.

The third hypothesis, the ‘Porter hypothesis’ assumes a race to the top (Porter, M. E., & Van der Linde 1995). Based on this hypothesis, developed countries may continue to make new and stricter environmental regulations that encourage innovation and in turn, increase the environmental quality of all the parties of the agreement

Since 1990, environmental provisions increasingly feature in trade agreements. This prominent feature of environmental provisions in FTAs raises the question as to why countries decide to include them. Are trade negotiations opportunities to promote stringent environmental standards or are countries using these provisions for protectionist interest? Since 2009, the vast majority of trade and environment disputes have been ‘next generation conflicts’, where industrial policies feature both environmental benefits and significant protectionism