2000471033 Seyhan AGRA
2001471109 Cenker E. TEZEL
TRADE ENVIRONMENT AND SUSTAINABLE DEVELOPMENT
ANALYZING THE SUBJECT
1. DIFFERENT PERSPECTIVES
 Trade Perspective
 Environmental Perspective
 Development Perspective
2. THE INTERACTION OF TRADE & ENVIRONMENT
 Structural Effects
 Technology Effects
 Product Effects
 Efficiency Effects
3. SUSTAINABLE DEVELOPMENT
 What does “Sustainable Development” mean?
 The Principles of Sustainable Developments
1.
DIFFERENT PERSPECTIVES
People come to the trade-environment debates from many different backgrounds. People understand the issues through
three common perspectives;
1.1 Trade Perspective
1.2 Environmental Perspective
1.3 Development Perspective
1.1 Trade Perspective :
 Trade creates the wealth that could be used to increase human well-being.
 But national governments will try to preserve domestic markets against foreign competition.
 In doing so, governments make their citizens worse off: domestic firms become inefficient, domestic consumers
pay higher prices and more efficient foreign firms are shut-out.
 The best protection is a strong system of rules against such behaviour.
 Even after signing such agreements countries will look for loopholes. Banning or restricting goods on
environmental grounds may be one such loophole.
 Trade can actually be good for the environment, since it creates wealth that can be used for environmental
improvement, and the efficiency gains from trade can mean fewer resources used and less waste produced.
1.2 Environmental Perspective:
 The current trend seriously threatens the earth’s ecosystems.
 But national governments will try to protect domestic industries against “costly” environmental demands.
 In doing so, governments make their citizens worse off: domestic firms make profits but the public subsidizes
them by paying the costs of environmental degradation.
 One way to avoid problems is a strong system of rules spelling out clearly how the environment shall
be
protected at national and international levels.
 Trade means more good produced and thus in many cases more environmental damage. The wealth created by
trade will not necessarily result in environmental improvements.
1.3 Development Perspective:
 Over one-fifth of world’s population live in absolute poverty, most of them in developing countries and the gap
between the rich and poor countries continue to widen. Top priority of developing countries should be reducing that
poverty and narrowing that gap.
 Openness to trade and investment may be a key way to do so.
 But rich countries protect their industries with subsidizes, special trade rules and tariff systems that hurt
developing country exporters.
 The best solution is a strong set of multilateral rules against such behaviour. But current WTO rules are too deeply
influenced by the powerful trading countries.
 Demands that poor countries comply with rich country environmental standards are unfair, particularly if they are
not accompanied by technical or financial assistance.
2. THE INTERACTON OF TRADE AND ENVIRONMENT
 The relationship between environment and trade policies became a topical subject in the 1990s. The interaction
between two is multiple complex and important
2.1 Structural Effects:
 On the Positive Side, trade liberalization may remove subsidies quotas or other trade measures which protect
domestic products and prevent allocate efficiency. Especially the products that a country projects are pollutionincentive, trade liberalization will lead to a substitution of these products more environmentally-friendly ones from
abroad.
 On The Negative Side, if the goods that a country makes well are based on natural resources, or are pollution
incentive, then trade liberalization would increase the share of such industries in the domestic economy
2.2 Technology Effects:
 Positive Technology Effects result when the output of pollution per unit of economic product is reduced. Product
effects are sometimes termed as “technology effects”
 Negative Technology Effects may occur, if the firms use outdated less efficient technology in countries where
health, safety, and environmental protection are more relax.
2.3 Product Effects:
 On Positive Side trade may lead to spreading new technologies for protecting the environment, such as microbial
techniques for cleaning-up oil spills. Or it may spread new goods that have less environmental impacts such as solar
techniques are more fuel-efficient automobiles.
 In The Negative Side trade may facilitate international movements of goods that would best never be traded.
Transportation of hazardous wastes increases the environmental risks.
2.4 Efficiency Effects:
 If the production or consumption of some of these goods has detrimental effects upon the environment, which are
not fully reflected in the cost of production, then more trade may impinge upon the quality of environment. Most
economic activity damages the environment, whether in extracting raw materials, harvesting renewable resources, or
in creating waste and pollution.
3. SUSTAINABLE DEVELOPMENT
3.1 What does “Sustainable Development” mean?
 Sustainable development requires a balance between the nature and mankind; through this balance, it programmes
for the life and development of both present and future generations without depleting natural resources. According
to the Brundtland Commission Report;
“Sustainable Development is development that meets the needs of the present without compromising the ability of
future generations to meet their own needs.”
 It is a concept, which has social, ecological, economic, spatial and cultural dimensions. Sustainable development
focuses on improving the quality of life of all Earth’s citizens without increasing the use of natural resources beyond
the capacity of the environment.
3.2 The Principles of Sustainable Development :
The Rio Declaration on Environment and Development determined the principles of sustainable development. Reevaluation of these principles by considering trade can help building sustainable trades;
 Preventing and precaution
 Efficiency and cost internalization
 Equity
 Subsidiary
 Common but differentiated responsibility
 Good Governance
 Public participation and responsibility
 Openness
 Environmental integrity
 Polluter pay principle
 International cooperation
NAFİZ KARAİN & EMİN CURT & CEMRE
1.Trade
Trade is one element of a larger exchange among people, communities and nations that involves goods and
services, culture and information as well as the natural environment. Different countries of course have different
comparative advantages in goods and services but they also have differences in culture, social systems and attitudes
toward the environment. These differences can not simply be homogenized under the banner of free trade. Each
community seeks to preserve its identity and maintain its own set of values.
2. Why Do Countries Trade?
Countries trade because of differences in comparative advantage. The idea of comparative advantage suggests
that, given demand, countries should export products that they can produce relatively cheaply and import products
for which they can
produce relatively cheaply and import products for which they have a relative cost
disadvantage. More recent economic models have extended the definition of factors to include assimilative capacity,
that is, the capacity of the environment to reduce pollutants by natural processes. The higher assimilative capacity,
the less the environmental damage caused by the emission of a given amount of pollutants.
Traditional trade models also ignore the non-priced use of the environment as consumption good. This
underestimates the value consumers may place on the environment and therefore the cost of using the environment
for other functions. These two factors can be significant in determining a country’s comparative advantage.
3. Interaction between Trade and Environment
Foreign trade is an increasingly important driver of economic development. For the past 50 years, the volume of
world trade has grown an average six percent every year. During the same period the world has also seen enormous
environmental degradation; pollution has increased and many of the world’s natural resources have been seriously
depleted. It is estimated that since 1970, some 30 percent of the planet’s natural wealth has been lost.
The relationship between environment and trade policies became a topical subject in the dimensions of this
relation; various trade policies can affect the environment while policies designed to protect the environment can
affect trade. Trade flows and the rules that govern them are massive force for economic, environmental and social
chance. There is no simple pattern to the relationship between trade and environment. Depending on the sector, the
country, the markets and the prevailing policies, trade and trade liberalization may be good or bad for the
environment.
4. Economic Development and Its Environmental Impact
The issue here is the extent to which a country should forego its own economic development in order to
preserve the environment. Inevitably it involves conflict. For example industrialization is generally considered the
key to improving. Most developing countries seek to industrialize in order to improve health here, infrastructure and
so on. As industrial development brings economic improvement, it also creates improvement in quality of life
generally. At least, his is theory. In reality there are these drawbacks: industrialization brings
pollution, social
change, connected with this, migration from rural to urban. This might be child labour.
The environment can be affected as above:
The population increases. Natural resources become more heavily used. Pressure on living space becomes
greater. Waste products will increase. More food is required by farming less land.
5. What is Sustainable Development?
The main elements of sustainable development emerged at the 1972 United Nations Conference on the Human
Environment in Stockholm, Sweden. The central themes of the conference were:

The interdependence of human beings and natural environment

The links between economic and social development and environmental protection;

The need for a global vision and common principles.
The Brundtland Commission went on to say that:
...sustainable development is not a fixed state of harmony, but rather a process of change in which the
exploitation of resources, the direction of investment, the orientation of technological development, and institutional
change are made consistent with future as well as present needs.
The Rio Declaration: Some Key Notions
The Rio Declaration, which was held in Rio in 1992, firmly established the inherent link between
environmental issues and development, stating, in its Principles 4, that “in order to achieve sustainable
development, environmental protection shall constitute an integral part of the development process and cannot be in
isolation from it.”
The Declaration’s 15th and 16th Principles set out two other important ideas that are now widely accepted by
policy makers: the “precautionary approach “, which requires that “when there are threats of serious or irreversible
damage, lack of full scientific certainty shall not be used as reason for postponing cost-effective measures to prevent
environmental degradation “; and the “polluter pays “principle, establishing that “the polluter should, in principle,
bear the cost of pollution “.