Multilateral environmental agreements and impacts on global trade

Multilateral Environmental Agreements and Global Trade

Multilateral Environmental Agreements (MEAs) are legal instruments for the regulation of activities affecting the environment (Eckersley, 2004). These MEAs form an essential framework for efforts by the international community to reduce environmental degradation and promote development that is sustainable. Currently there are more than 250 MEAs dealing with various environmental issues (Singh, 2009). Nearly 20 of those include provisions that have the potential to affect trade. Because these can have a serious affect on trade and the businesses that would be involved in that trade, these MEAs are important and significant factors in the global trade network.

Many people see only the businesses that must deal with these MEAs as being affected by them, but that is not entirely true. The end users (i.e. consumers) are also affected indirectly by MEAs because the environmental agreements affecting trade can change the nature of what businesses are required to do in order to continue to do business with other companies and in other areas of the country and the world (Eckersley, 2004; Krist, 2002; Mushkat, 2003). While many people know little about MEAs, these agreements are having and will continue to have a strong and potentially adverse effect on global trade and the end user cost of goods around the world (Singh, 2009).

The MEAs can require changes in operation, which can, in turn, raise the costs of doing business (O'Neill, 2002). If those business costs are raised too much, the costs will be passed on to the consumer. The man or woman who is buying the goods for end user consumption may not understand why those goods suddenly cost more, but it could be a result of MEAs and global issues with trade and the environment (Scott, 2004; Singh, 2009). Up until recent years, this was not an issue.

There was much less concern about the environment, and terms like climate change and global warming were not being used in the media and in business circles with anything like the frequency with which they are currently being discussed. Now that global warming has become a buzzword and the changes that are taking place in the environment has become more evident, it is easier to see that MEAs will continue to develop and lead to more requirements that could continue to place restrictions on trade and raise the cost of goods that are being traded by companies throughout various parts of the world. In order to fully understand MEAs, it is important to address some examples of them and how they actually relate to the global trade that is taking place among businesses in many countries.

The Lack of Focus on MEAs

One of the largest problems seen when it comes to MEAs and global trade, is that MEAs are often not taken seriously. They are subject to much argument from the WTO (World Trade Organization), and trying to place environmental sanctions on countries because of what they are doing where trade is concerned is not something that is working very well for the majority of countries (O'Neill, 2002; Scott, 2004). While unfortunate, one of the main arguments is that there is little that these countries can do other than complain about the issue. In other words, the WTO holds many more cards than any MEA agreement, which means that the WTO has a much larger opportunity to sanction something than does any country creating an MEA (Eckersley, 2004; Krist, 2002).

International trade has been ongoing for hundreds if not thousands of years, and globalization and the internet have only made that trade easier and more popular. With that in mind, MEAs are very new and have not been in force (or enforced) at all until recently. That puts MEAs at a distinct disadvantage already, and then they must also contend with the WTO when it comes to attempting to place trade sanctions against countries.

Essentially, the WTO can simply overrule the MEA and avoid sanctioning a country's trade with other countries "just" because the country is not taking steps to protect the environment (Mushkat, 2003). This is trade and environmental concern on a very grand scale, because it does not affect just a few businesses. If there are trade sanctions between countries, that affects all businesses in those countries, along with the governments of those countries (Krist, 2002). Trade sanctions also affect the citizens of those countries, because there are goods they can no longer get - and some that are still available but that suddenly cost much more than would otherwise be the case.

That can have a very detrimental effect on the economy of a particular country, which further damages the financial lives of people who are already struggling with issues that were largely not of their own doing (Singh, 2009). In short, the conflict between the trade sanctions of the WTO and the concerns of the MEAs are a problem for a much larger group of people throughout the world than was first assumed. This is a major point that many people fail to address when they consider MEAs and global trade.

MEA and Agriculture

Another major point that has to be addressed is that agriculture is often a large part of the lifeblood of a country (Eckersley, 2004; Krist, 2002; Singh, 2009). If there are suddenly restrictions on the export of those agricultural products because of the way they are produced or created, where does that leave the creators of those goods? Often, this issue with the WTO and the MEAs comes down to the "little guy." The farmer or fisherman who suddenly cannot sell his wares anymore, because there are no buyers, or the person who spends his or her days creating handmade goods from sustainable products, only to find that they are unsellable because others are not doing the same with regard to the environment.

Those are often the people who suffer the most and who are struggling to continue to thrive - or even just survive - when there are trade sanctions. They are also the same people who are so small-time in the grand scheme of things that they are powerless to do anything about sanctions and restrictions. They may do everything right, but if they are selling, even unknowingly, to people who are doing everything wrong, they may find that they suddenly have no one to sell to and nowhere to go. Naturally, that spells disaster for them on a personal finance level. But it also starts a ripple effect that cannot just be ignored and that will spread to the rest of the country in which those people reside - as well as to some of the people in the countries to which the goods were being sold (Eckersley, 2004; O'Neill, 2002; Scott, 2004).

China is one of the top producers of goods in the world today (Singh, 2009). Many U.S. companies and European companies have contracted out the goods they want to sell to Chinese and Indian companies (O'Neill, 2002; Singh, 2009). However, are those companies in other countries treating the environment correctly? Are they doing what they should to abide by the MEAs? If not, will there be WTO trade sanctions, or will the WTO look the other way because of the vast amounts of money that is changing hands. That is not to imply that the WTO is corrupt, but only to showcase the fact that many people, businesses, and organizations will follow the money.

Which matters more: keeping trade running smoothly throughout the world, or damage to the environment? Naturally, there are different opinions on that and different answers to the question, depending on who is asked and their beliefs about sustainability and trade. Some believe the planet is being irreparably damaged by humankind. Others believe no harm is being done at all. Most people's beliefs on the matter fall somewhere in between those two extremes, but most people also lack in-depth knowledge of trade issues and how many goods are actually produced, stored, shipped, and sold throughout the world (Krist, 2002; Mushkat, 2003).

The Heart of the Issues

There are two issues that have to be addressed by the WTO and the MEAs. First, the WTO needs to have proper deference to the MEAs, and right now that is not taking place (Krist, 2002). Second, the MEAs have to end their "ad hoc" dispute and compliance procedures and create something that has more detail and better clarification (Krist, 2002). In turn, that will help the WTO understand the sometimes conflicting regulations with which it will be dealing, and avoid confusion. The problems between the two areas are more about confusion and misunderstanding than they are about actual animosity from one group to another, although that is also a concern.

Global trade rules are in need of clarification, and that job must fall to both the WTO and the MEA, as opposed to only one organization or the other. Both are part of international law, and both are equally as valid. However, the WTO has taken it upon itself to override and overrule the MEAs in many cases, which has helped keep trade moving forward but has done nothing to protect the environment (Singh, 2009). Both issues are very important, and there is no reason why they should continue to be kept so separate. They can certainly be brought more closely together and focused on in such a way as to ensure that trade takes place as easily as possible while still making certain that the environment is protected.

The issue is not one that cannot be overcome, and it is not even one that is that complicated at the most basic of levels. However, it is complicated by the international laws that are already created and by the seeming lack of interest in the MEAs and the WTO working together. As international talks come up from time to time, it is important that those talks be used to build bridges between the MEAs and the WTO so that the environment can be protected as much as possible and trade can continue at a level that does not disrupt the global economy (Scott, 2004; Singh, 2009).

That has been at the root of the problem for some time: saving the environment will cost money. Right now, there are specific things that the WTO simply will not tolerate. When its rules are broken, sanctions will appear against the offending countries until those countries make changes (Singh, 2009). Environmental issues are generally not part of the WTO sanctions, however, so damaging the environment will not be something the WTO would sanction against (Singh, 2009). That is the responsibility and job of the MEAs, but when the MEAs are overruled by the WTO there is a twofold problem.

First, the obvious issue is that the environment is not actually protected when the MEAs are not enforced. Second, the message is sent that the MEAs are not important, and that the WTO is the only organization that matters. That leads countries and companies to believe that pleasing the WTO is all that is necessary, and that if they do that they do not have to worry about what they are doing to the environment (Mushkat, 2003; Scott, 2004). This can be a very difficult issue to correct, especially when many people and companies do not take the idea of damage to the environment very seriously, despite evidence that would indicate that the environment is being damaged by issues such as pollution.

In order to address the problem, both the MEAs and the WTO must agree and acknowledge that they have equal importance and that neither one takes precedence over the other (Eckersley, 2004; Krist, 2002). From that point, they will have to carefully examine where their differences lie, so those differences can be addressed and adjusted. There will be compromise needed, of course, but that is something that can be handled relatively easily with an open mind and a willingness to solve problems. If there is no willingness to make concessions, the WTO and the MEAs will have more difficulty coming together and agreeing on issues that have long-standing importance and value to both global trade and the environment.

MEAs affect global trade and the cost of that trade, which ultimately affects the end cost of the goods that are traded (Eckersley, 2004). This is important to realize, but many people have no knowledge of MEAs. They have, however, heard of the WTO and have a basic understanding of how that organization operates. Instead of focusing only on the WTO, it is time to bring the MEAs into the light, as well. By showcasing what they are offering to the world in the way of protecting and caring for the environment, the true value of MEAs can be seen. That will help them to be taken more seriously, and will work to show that they are on equal footing with the WTO and the regulations it requires countries to follow and abide by.

Understanding international trade can take time, and each time the rules or regulations are changed it can get more complicated. Additionally, the MEAs further add confusion because they add a new element of requirements to what has to be addressed in order to trade successfully on a global level. Despite that, the MEAs are very important to the protection of the planet and they can be made to work in harmony with the mission of the WTO, thus fostering valuable and safe global trade that is sustainable.