Global Trade and the Environment

1
Global Trade and the Environment

• Edward Goldsmith

2
Over-exploitation

• We are overusing the flora and fauna of the
  earth, polluting the water and seas, even
  changing the climate.
• We need to reduce our impact!

3
Consequences of Globalization

• Economic globalization and development increases
  rather than decreases our problems.
• The Newly Industrialized Countries are
  environmental disasters.

4
The Case of Taiwan

• Consider Taiwan, the forests are cut and the land
  eroding due to roads.
• Fertilizers have made the soil acidic and less
  fertile and polluted the drinking water.
  Pesticides are also pollutants and largely
  unregulated.
• Farmers are afraid to eat the food they sell.

5
Factories and Pollution

• Factories are polluting to stay competitive and
  this harms animals and humans, some of the water
  is actually combustible.
• Shrimp farmers are suffering, and humans have
  more cancer and asthma.
• Can you think of other explanations for the
  higher cancer rates?

6
Race to the Bottom

• Competition requires reducing costs and
  increasing production. Money can be saved if
  expensive regulations are not in place or not
  followed. Even rich countries have an incentive
  to pollute.

7
Culture

• Globalization has negatively impacted cultures
  around the world turning more peoples into
  consumers and producers of the latest technology
  spreading western values and ways of life.
• But Western life is unsustainable.
• The earth cannot support 6 billion people living
  like we live.

8
Sustainability

• All countries could consume like we do by 2060 if
  there was 4 percent growth per year.
• This would have an impact on the environment 16
  times the level of our current impact!
• Again, this is not sustainable.

9
Think About It

• If everyone had a car and a refrigerator, there
  would be massive global warming.

10
Specialization

• One principle of free trade is to specialize in
  what one is good at making and import everything
  else.
• 33 percent of plywood, 84 percent of coffee and
  46 percent of crude oil is already
  exported/imported in this way.

11
Timber and Animal Products

• Timber is also exported and can cause
  deforestation and pollution when the wood is
  burned. It causes erosion, droughts and floods.
• Animals and animal products that are exported can
  lead to the dame kinds of problems and conflict
  over natural resources is endemic.

12
Tobacco, Coffee, and Peanuts

• Tobacco contributes to deforestation as the
  curing process requires a lot of wood to be
  burned. Coffee and peanuts are also really bad.

13
Fish Stocks

• Fish stocks are being depleted and are sometimes
  used to feed commercial fish and prawns. Prawn
  aquaculture has destroyed mangroves and used
  quite a bit of freshwater turning freshwater
  brackish.

14
Export and Deforestation

• As more land goes for export crops small farmers
  have less land and sometimes cut down the forests
  to plant. Soy bean cultivation has forced
  peasants to migrate from the Rio Grande de Sul
  into the Amazon in Brazil. The have to keep
  cutting down the forests because the land there
  will not grow crops for more than a few years.

15
Mining, Trucking, Roads

• Mining is equally destructive and transport
  requires a lot of energy and generates a lot of
  pollution.
• Trucking has been increasing as trade flows
  become greater.
• Roads provide loggers with access to forests and
  endanger indigenous communities that are
  susceptible to disease. Ports, too, are
  problematic.

16
Comparative Disadvantage

• Transport accidents, and global warming are
  hugely problematic. Wastes are growing, water
  use increasing, CO2 emissions expanding.
• But with competition countries put themselves at
  a comparative disadvantage if they try to
  regulate.
• Is this right?

17
Example

• For example, Japan and Europe were willing to tax
  carbon emissions but the tax would not pass in
  the US congress so this never happened.

18
Another Example

• Sustainable rubber farmers in the Amazon can not
  compete with Asian farmers who cut down the
  forests to get rubber. Michelin and Goodyear may
  move their business elsewhere.
• FYI Goodyear did cut plans to build a new plant
  in 2001

19
Safety

• Sometimes businesses try to save money by cutting
  corners on safety.
• Exon
• Union Carbide (Bhopal)

20
Deregulation

• Free trade requires nations to reduce labor,
  environmental, and other regulations.
• Deregulation has meant fewer environmental
  protections, and an assault on wetlands in the US
  (under the Regulatory Relief Task Force and
  others).

21
FTZs and SA

• Free trade zones free companies from important
  environmental, and labor regulations.
• Structural adjustment imposes this deregulation
  and free trade reforms on developing countries
  with the same results.

22
Forced Deregulation

• Free trade agreements allow trading partners to
  force the US (and other countries) to reduce
  regulations.
• E.g. the EU challenged gas guzzler taxes, safe
  drinking water and toxic waste laws, and more.

23
Minimizing Costs

• Businesses see environmental regulations as costs
  to be minimized.
• True? Always?

24
Trade Policy and the Environment

• Those creating free trade agreements sometimes
  argue that they have nothing to do with the
  environment, this is false.
• Trade policy they thinks should be kept separate
  from environmental policy this is impossible.

25
Rolling Back Regulation

• The polluter pays principle was rejected.
• The food safety standards are low, lower even
  than those in the US.
• Only ceilings for appropriate levels of
  environmental protection, not floors, are
  provided.

26
The Consequences

• When this article was written there was 12 times
  as much trade as there was in 1950 and 5 times as
  much economic growth.
• Poverty, social problems, unemployment, and
  environmental problems have all increased.

27
Alternatives

• Instead, we should emphasize local production for
  local consumption (reduce transportation costs).
• Reduce global trade.
• Ensure proper environmental protection.

28
Summary

• Growth and development require an assault on the
  environment. Overusing resources, threatening
  species, and creating pollution. Wealth tends to
  benefit just a few and little is spent on the
  environment. We need new alternatives!

29
Project

• Create a business brief about the potential costs
  and benefits of free trade that you could show
  your employer.
• If you were creating a utilitarian argument for
  or against free trade what would you suggest?
• Consider a potential objection a manager could
  raise to your proposal or conclusion and respond.