The Environment and Free Trade

Protecting the environment and the assimilation of the world economy are two of the fastest growing movements taking root around the globe today. One looks to protect the resources and natural beauty of our world, the other looks to maximize the efficiency of how those resources are distributed, while also maximizing profits.

While many arguments have been made that free trade actually benefits the environment, I feel ultimately that these claims are slightly biased and do not represent genuine ideas that reflect a philosophy of sustainability.  Unmitigated free trade causes many problems that need to be examined and corrected if we are going to forge responsibly ahead into the future.

The Environment and WTO

David Ginter wrote an excellent entry last week explaining how the World Trade Order (WTO) undermines local economies by placing power into the hands of corporation and governments (top-down management) and out of the hands of the people actually keeping the economy functioning. The WTO serves as a sort of middle man between corporations and national government that breaks down the barriers between a traditional national economy and the emerging global economy.

From an environmental perspective this creates many problems. First of all, commissions such as WTO and others such as NAFTA and the like extend rights to corporations in order to maximize profit. As most of us readily know, the maximization of profit often has little to do with protecting the environment in in both the short-term and long-term.

The maximization of profit manifests itself in what is called “a race to the bottom,” in which corporation outsource to countries with less stringent environmental regulations in order to drive down their cost of production (and have excess to cheaper labor.) When corporations are allowed to be less environmentally responsible in countries outside of their own, they save money that would otherwise be spent to protect the environment. While the evidence of this effect has been hotly contested among experts on the subject, I firmly believe that there is plenty of proof it exists.

Another problem with free trade is that as the middle class of countries such as China and India grow, their access to resources outside of their boundaries become easier. This creates massive operations, particularly deforestation, which is devastating to the environment within the country that is providing the resources to the middle-class of other countries and also contributes to global warming. Free trade allows easy access to these resources without any thought to what environmental harm may be incurred.

WTO also displaces local economies and puts them on the global scale. So the farmer who had once grown many staple crops to support himself and provide for those nearby him switches to growing just one crop in order to fit into the global economy. His crop then becomes an international commodity which is shipped all over the world, depending on the demand. Since it the countries governments that sign on to WTO agreements, the farmer has no choice and is often forced into this way of life due to either market forces or corrupt governments.

Is Free Trade Good for the Environment?

Many arguments are made that free trade is actually good for the environment, which the State Department actually endorses. The main one is that free trade benefits less developed countries and helps their economies grow and expand. As poorer countries prosper they will naturally  develop tougher environmental regulations that reflect the developmental history of countries like the United States and European nations.

I believe this is flawed assumption. Different sets of circumstances, particularly strong democracies, allowed movements to take hold that eventually led to more stringent environmental regulations. However, most less-developed countries do not have strong democracies and the assumption that they will develop them once their GDP rises I believe is also a false. Take China for example, which is growing at a rapid pace, but is not getting any closer to a thriving democracy. And while China may be leading the way in sustainable technology, their growth has outpaced environmental regulations in many other areas such as water pollution and recycling programs.

More importantly, to legitimize environmental degradation and destruction now and place bets that it will change in the future in my books is wrong. It is our responsibility to solve problems now instead of hoping that in the future things will turn out just fine. Continuing business as usual has consequences if we do not consider environmental stewardship as a factor in the global equation.

Tomorrow I will talk about some global solutions to the problem and what we as individuals can do to make the difference.