Multilateral Trade Agreements and Market-Based Environmental Policies
AbstractWe review the legal provisions of the WTO regime that have important implications for national, market-based environmental policies. We evaluate those provisions for their effects on a member country’s ability and incentives to design economically efficient environmental policies. International trade institutions do not recognize the polluter pays principle, posing some challenges for unilateral policies addressing cross-border pollutants and leakage. Nor do they recognize the economic equivalence of emission tax and permit regimes, leading to different potential constraints on policy design and leaving some environmental policies open to influence by protectionist motives. As many legality issues have yet to be disputed and resolved, opportunities exist to help the WTO and environmental institutions evolve in ways to enable and encourage good policymaking.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-02-28.
Date of creation: 13 May 2002
Date of revision:
trade; environment; WTO; GATT; market-based policies;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
This paper has been announced in the following NEP Reports:
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