Background Issues

The inclusion of environmental provisions in trade agreements has been contentious (see, e.g., Hoekman and Anderson 2000). Views on trade and the environment vary widely between economists, environmentalists, legal scholars and other analysts with respect to the effects of economic growth and trade liberalization on the environment and/or the effects of environmental regulations on trade. An eclectic group in commenting on the general treatment of the environment (Arrow et al. 1995, p. 91) state: “National and international economic policy have usually ignored the environment.” However, there is broad agreement that the world is faced with severe environmental problems. Nordström and Vaughan (1999, p. 1), in a special study for the WTO, for example, state: “The growing world economy has been accompanied by environmental degradation.” Bhagwati (1993) and Daly (1993) presented arguments for and against free trade, respectively, in the context of the environment in an issue of Scientific American and while environmental issues may have been undervalued among free-trade proponents in the past, they are now often at the forefront in free-trade discussions, although still opposed by some free-trade proponents (Bhagwati 2008).