The 'Preference for Pollution' and Other Fallacies, or Why Free Trade Isn't 'Progress'

PROGRESS IN INTERNATIONAL LAW, Russell A. Miller, Rebecca Bratspies, eds., Martinus Nijhoff Press, 2007

Temple University Legal Studies Research Paper No. 2007-14

16 Pages Posted: 7 May 2007

See all articles by Amy Sinden

Amy Sinden

Temple University - James E. Beasley School of Law; Center for Progressive Reform

Abstract

The argument that environmental standards must be harmonized among countries involved in free trade in order to ensure a "level playing field" has been prominent in the recent political discourse surrounding globalization and the expansion of international trade. Among academic economists, however, the level-playing-field argument has been widely rejected. In their view, the whole point of free trade is to exploit inherent differences among countries. Differing environmental standards simply reflect the differing preferences for environmental protection among citizens of different countries and, like differences in natural resource endowments, can be exploited via free trade in order to increase overall social welfare. The economists are wrong in rejecting the level playing field argument, however. While it may be true that free trade without harmonization will increase social welfare in the ideal world of economic theory, there is little reason to think that it will do so in the real world. In particular, the economists' claim depends on the untenable assumption that the countries involved in free trade all set and enforce environmental standards at economically optimal - or efficient - levels. If we instead make the far more realistic assumption that environmental standards in one or more countries either are set too low to begin with or are under-enforced, the economists' claim - that free trade increases social welfare - no longer holds. Basic tenets of political and economic theory make clear that political and market dynamics tend systematically to skew environmental standard-setting and enforcement to sub-optimal levels. And where that is true, free trade between countries with differing standards is likely to decrease overall social welfare. Therefore, in order to avoid these negative welfare effects, upward harmonization of environmental standards should be a pre-requisite to free trade.

Keywords: environment, trade, economics, regulation, harmonization, WTO

JEL Classification: K00, K23, K32, K33

Suggested Citation

Sinden, Amy, The 'Preference for Pollution' and Other Fallacies, or Why Free Trade Isn't 'Progress'. PROGRESS IN INTERNATIONAL LAW, Russell A. Miller, Rebecca Bratspies, eds., Martinus Nijhoff Press, 2007, Temple University Legal Studies Research Paper No. 2007-14, Available at SSRN: https://ssrn.com/abstract=984312

Amy Sinden (Contact Author)

Temple University - James E. Beasley School of Law ( email )

1719 N. Broad Street
Philadelphia, PA 19122
United States
215-204-4969 (Phone)
215-204-1185 (Fax)

Center for Progressive Reform ( email )

500 West Baltimore Street
Baltimore, MD 21201
United States

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