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Trade and Environmental Policy: A Race to the Bottom?

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  • Ian Sheldon

Abstract

The focus of this paper is the issue of regulatory chill and a race to the bottom in environmental standards and policies. In particular, it explores the possibility that resolution of this problem may lie in a more flexible application of the existing General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO) rules. The structure of the discussion is divided into four parts: (i) the standard analysis of trade and environmental policy is laid out; (ii) the theoretical analysis of and empirical evidence for the existence of pollution havens is reviewed; (iii) the main arguments as to why governments may weaken domestic environmental policy with greater trade liberalisation is outlined; and (iv) some recent analysis of border tax adjustments for environmental taxes is laid out, leading to the basic conclusion of the paper: a method for countering any tendency for regulatory chill and a race to the bottom in environmental policies is already embedded in existing GATT/WTO rules.

Suggested Citation

  • Ian Sheldon, 2006. "Trade and Environmental Policy: A Race to the Bottom?," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(3), pages 365-392, September.
    • Handle: RePEc:bla:jageco:v:57:y:2006:i:3:p:365-392
    DOI: 10.1111/j.1477-9552.2006.00056.x
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    References listed on IDEAS

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    1. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    2. Kyle Bagwell & Robert W. Staiger, 2001. "Domestic Policies, National Sovereignty, and International Economic Institutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 519-562.
    3. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    4. Daniel Esty, 1994. "Greening the GATT: Trade, Environment, and the Future," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 40, April.
    5. Ulph, A., 1994. "Environmental policy and international trade: a survey of recent economic analysis," Discussion Paper Series In Economics And Econometrics 9423, Economics Division, School of Social Sciences, University of Southampton.
    6. Low, P., 1992. "International Trade and the Environment," World Bank - Discussion Papers 159, World Bank.
    7. Jagdish Bhagwati & Arvind Panagariya & T. N. Srinivasan, 1998. "Lectures on International Trade, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522470, April.
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    Cited by:

    1. Fabio Gaetano Santeramo & Emilia Lamonaca, 2019. "The Effects of Non‐tariff Measures on Agri‐food Trade: A Review and Meta‐analysis of Empirical Evidence," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(3), pages 595-617, September.
    2. Santeramo, Fabio G., 2017. "On Non-Tariff Measures and Changes in Trade Routes: From North-North to South-South Trade?," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 263493, European Association of Agricultural Economists.
    3. Eyland, Terry & Zaccour, Georges, 2014. "Carbon tariffs and cooperative outcomes," Energy Policy, Elsevier, vol. 65(C), pages 718-728.
    4. Xianwang Lv & Yingming Zhu & Jiazhen Du, 2024. "Can Regional Integration Policies Enhance the Win–Win Situation of Economic Growth and Environmental Protection? New Evidence for Achieving Carbon Neutrality Goals," Sustainability, MDPI, vol. 16(4), pages 1-22, February.
    5. Keen, Michael & Kotsogiannis, Christos, 2014. "Coordinating climate and trade policies: Pareto efficiency and the role of border tax adjustments," Journal of International Economics, Elsevier, vol. 94(1), pages 119-128.
    6. Ali Çelik, 2023. "Testing Linear and Nonlinear Relationships Between Foreign Direct Investment and Fossil Energy Consumption in Fragile Five Countries," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(38), pages 1-77, June.
    7. Jonas Gamso, 2018. "Trade-based adoption of voluntary environmental programs in the developing world: Racing to the top or stuck in the mud?," Policy Sciences, Springer;Society of Policy Sciences, vol. 51(4), pages 515-543, December.
    8. Samuel Brazys & Minhaj Mahmud, 2022. "Poisoning the Well? The "Last Mile" Politics of Donor Control and Elite Capture in Bangladesh's Arsenic Mitigation," Working Papers 202207, Geary Institute, University College Dublin.
    9. Cui, Cathy Xin & Ha, Soo Jung & Hanley, Nicholas & McGregor, Peter G & Turner, Karen & Yin, Ya Ping, 2011. "Productivity Growth, Decoupling and Pollution Leakage," Stirling Economics Discussion Papers 2011-13, University of Stirling, Division of Economics.
    10. Mathieu Dufour, 2023. "Trade Policy and Ecological Transition," Politics and Governance, Cogitatio Press, vol. 11(1), pages 214-222.
    11. Berger, Axel & Brandi, Clara & Bruhn, Dominique & Chi, Manjiao, 2017. "Towards “greening” trade? Tracking environmental provisions in the preferential trade agreements of emerging markets," IDOS Discussion Papers 2/2017, German Institute of Development and Sustainability (IDOS).

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