¶ … International Trade and Environment Introduction and review of literature

Sustainability has been a dominant developmental policy issue over the last twenty years. Many governments and policymaking institutions all over the globe have sought to reduce the effects of climate change by making sure we make the best use of the resources at our disposal. The issue of sustainability has three important aspects -- social, environmental and economic. All of these aspects affect trade directly and indirectly (Ossa, 2014). Trade can have positive or negative effects to the environment. Positive trade focuses on the optimal utilization of resources through integration of efficient technologies while negative trade is that which allows pollution and an inefficient use of environmental resources. Trade can also be utilized as a vector through which one government's environmental policy preferences impact trade and relations with and in other countries. For instance, several African countries such as Kenya have banned the importation of vehicles with emission levels beyond certain thresholds. Another example is the order to stop the construction of the Keystone XL pipeline that was to transport crude from Western Canada to the south of U.S. (Shapiro & Walker, 2015).

Late last year, the United Nations drafted a new agenda for sustainable development entitled "Transforming our World." One of the most important elements in the new agenda, are the commitments made by member states on trade. Apart from commitments, member states also agreed on regulatory cooperation and other issues that were closely related to the environmental goals that the agenda aimed to achieve (Casier, Fraser, Halle, and Wolfe, 2014). Regulatory cooperation is an essential part of the new agenda especially with regards to climate change. Apart from mandatory and voluntary standards instituted by governments and national institutions, several international organizations have also come up with standards (Caliendo & Parro, 2015). Almost all these standards also incorporate social concerns such as labor and environment. For instance, many international lending institutions attach social conditions or standards to their loans.

Despite...

Thus, countries have not been able to properly adopt proposed regulations due to opposition from activists.
Description of the problem

The increasingly popular aspect of industrialization referred to as green industrial policy- a global standard intertwines the current environmental agenda intricately, posing complex queries. It is clear that more governments have incorporated environmental conservation elements to their industrialization policies so as to reduce global warming. However, owing to the fact that these government policies involve market intervention, the policymakers should be careful not to draft policies that would unreasonably affect trade (Nordhaus, 2014). However, finding the balance between protecting the environment and not creating obstacles to trade has been a huge challenge (Global Subsidies Initiative, 2015; Halle 2014).

For instance, refer the 2013 dispute in the World Trade Organization about Ontario's FIT (Feed-in Tariff) program. The program encouraged the construction of renewable generation facilities by providing incentives such as higher buying prices for the electricity produced, if the facilities used locally manufactured technology. The conflict surrounded the fact that critics thought that this would be a barrier to trade even though the program clearly encouraged sustainable development (Casier and Moerenhout 2013).

Another issue is concerning other subsidies for sustainable development. Some of these subsidies have been found to have a negative impact on trade according to studies done by the Global Subsidies Initiative (2015). Thus, it is crucial for the WTO to advice governments and international organizations on the use of such subsidies. Enhancing transparency of subsidies especially those for the development of alternative energy sources would be a crucial step in not only promoting effective use of resources but also reducing the negative impact of their use (Casier et al. 2014).

If the relevant international institutions effectively regulated the markets, then the goals of environmental organizations and trade organizations would be compatible (Nordhaus, 2014). However, most of the concerned regulations are not that effective. One of the international agreements on this matter is GATT (General Agreement on Tariffs and Trade) which recognized that opening up of markets to…