Part One: Conflicting opinions and attitudes to free trade and environmental protection

As mentioned above, there are different opinions and attitudes to the relationship between trade and environment. Those prefer free trade regard environment factors as part of the comparative advantages that one country may have to another.3 If all the countries have the same environmental standards or environmental resources, it will distort the free trade because it is negative to comparative advantages that are the basis of the belief of free trade. They believe that a country would only raise its environmental standards when the marginal benefits of that protection would be equal to the marginal costs. It is this market-based idea that determines the efficient allocation of resources between environment and other concerns. Actually, when the economic growth of the developing countries has reached the threshold, they begin to take steps to raise their environmental standards. One example is that Singapore has adopted its own eco-labelling scheme, the “Green Label” in 1992. In the past, the eco-labelling scheme was regarded to be used only by the developed countries to protect environment.

Another point of those in favour of free trade is that there should be no inherent conflict between trade and environment. The common objective of the two sides is better life, trade is regarded as a means to attain sustainable development, and we should use trade measures to further protect the environment, but not use environmental measures to restrict trade. They argue that as countries developing, they spend more on environmental controls and so tend to pollute less than they did when they were less advanced economically.4 The changed attitude of the developed countries is the best example. It is the same to the developing countries. China has 1.3 billion people living in the limited territory. In the past, peasants had to destroy plenty of forest and grassland for cultivating to support so many people. Now, some of these peasants are encouraged to give up cultivating and to plant more trees and grasses because China central government promises to provide free food to them. And it was also reported that between 1998 and the end of 2000, China's central government would have spent a total of RMB 27 billions(US$3.26 billions) for ecological and environmental project.5 It is incredible and unprecedented in China's history.

So countries especially developing countries argue that economic growth and trade liberalization have a positive role to play in the achievement of sustainable development. And an open, equitable and non-discriminatory multinational trading system has a key contribution to make to national and international efforts to better protection and conserve environmental resources and promote sustainable development. Further liberalization of international trade has a crucial role to play in order to generate revenue that can be devoted to environmental protection, to allow for a more efficient allocation of environmental resources and for the removal of trade restrictive policies. It is also argued that trade restrictions are neither the only nor necessary policy instruments to use in multilateral environmental agreements. It is also stated in Principle 21 of the Rio Declaration that "unilateral measures should be avoided as far as possible".

There is no doubt that the developing countries are the initiators and supporters of above-said opinions. The developing countries are also concerned with the attitude of the developed countries. The developing countries argue that developed countries are seem to be more concerned with environment, but actually not, because they consume more energy and thus cause more pollution, but they are unwilling to reduce energy consuming. It seems that they are more concerned with promoting environmental protection, but actually not, because environment standards they use are not always for environmental protection, but for something else. The NAFTA6 is a good example, what the US labour unions wanted to do was that they want to prevent the loss of job to lower-cost Mexico. It seems that they are more concerned with environment of the whole world, but actually not, because they export goods that are domestically prohibited in their own territory to the developing countries, they even export hazardous and other wastes to the developing countries. It seems that they are more concerned with environment of the whole world, but actually not, because they are more powerful, they use the carrot and the stick to raise environmental standards, but they are miserly in finance and technology assistance. The developing countries are left to be lack of information and technology to change their production methods to meet the environmental standards.

However, on the other hand, many environmentalists are critical of trade liberalization. In their view, free trade is responsible for many aspects of environmental degradation and for the failure of policy makers to protect the environment adequately.

They argue that free trade shifting the production of pollution-intensive goods toward the low-income, high-polluting South and that will increase global pollution, because the decrease in northern emissions is insufficient at the margin to compensate for the increase in southern emissions. They also think that because pollution is not local but trans-boundary or global in nature so pollution in one country may affect another country’s environment. Green house is a good example.

Another important argument that environmentalists hold is that the trade liberalization can make the developing countries and developed countries lower the environment standard together. Why? In practice, every businessman wants to make the great profits in the international business, whereas lowering the cost is the best and most efficient way. Since WTO agreements require member states to abolish the tariff barrier so as to make trade flow free and thus develop the domestic economy, the importation and exportation became easy. With revoking the tariff barrier, businessman thinks much more about the other aspects of the investment surroundings than the tariff. For some pollution-intensive products, the environment requirements become the most important. The developing countries want to develop the economy as soon as possible. For them, the first important thing is to attract the foreign investment to develop domestic economy. The environment protection undoubtedly including the strong policies and requirement will increase the cost of some products—high requirements will improve the cost twice or three times than the cost under lower requirements so as to impede some pollution intensive industry. So the developing countries usually lower the environment requirements for some industries so as to attract the foreign investment. Whereas the international trading system, actually encourages any participant country, particularly one that is less wealthy, to relax its environmental standards to gain a competitive advantage. Once any country does so, other countries, also struggling to develop sustainable economics, feel compelled to relax their standards in order to stay competitive in the international markets. So we can imagine the horrible result. Both the developing countries and developed countries will lower the environment standards. Under such circumstance, trade liberalization like a breeze makes the burned house---already harmed environment---much worse. Countries compete with each other in a “ race to the bottom” with respect to the environmental standards to attract or keep capital. Even though competing countries want environmental protection at high levels, the countries’ inability to agree with (or trust) each other means that each country will opt for lower levels of protection in order to maximise their market share in the world economy.

The environmentalists also criticise the world trade organisation plays negative role as to the environmental protection. It is also a big issue, we will discuss it in the following part:
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