Alternative Motivations for Including Trade Provisions in Multilateral Environmental Agreements

Arguments in support of the view that trade provisions are an essential part of certain multilateral environmental agreements (MEAs) can be categorized as follows: (1) such provisions are necessary on grounds of economic efficiency (optimal intervention or lowest overall cost), or (2) they are necessary to increase the number of countries which comply with the provisions of the MEA (promote compliance or contain leakage). Much of the literature on the use of trade provisions is concerned with the "insufficient compliance" argument. Although popular, trade measures are not the only sticks available to promote compliance. The United Nations Charter lists a number of non-trade actions available to the international community, and other possible non-trade actions come easily to mind. Part of the answer why existing MEAs rely so heavily on trade measures for sticks may be that use of other measures is viewed as too aggressive. In some situations, there may also be a perception (or misperception) that there is an economic efficiency argument for using trade provisions. A more worrisome explanation is that well organized protectionist interests have promoted mercantilist cost calculations that under-estimate the costs of trade restrictions and over-estimate the costs of non-trade measures. It should be noted, however, that none of the treaties or instruments negotiated since the 1992 UNCED contain trade provisions, and that carrots - mostly offers of financial assistance and environmental technology - are gaining favour. Using MFN reductions in trade barriers as a carrot would be a way of linking trade and environment that could promise unambiguous gains in both areas, in contrast to relying on trade restrictions, in which case the losses from increased restrictions on imports must be weighed against any environmental gains.