Trade policy and environmental protection

The paper analyzes the relationship between trade policy and environmental protection. National and global environmental issues are distinguished. In principle, there is no conflict between an institutional order for international trade and national environmental policy. Protectionism against environmental policy, eco-imperialism and environmental policy as a trade strategy are not justified. Uncertainty in international trade arising from environmental policy should be reduced by the principles of first-best solution, of the appropriateness of means, of non-discrimination, of necessity, of the limits of territorial sovereignty, and of country-of-origin. With respect to global issues, international agreements, trade sanctions, side payments and trade liberalization are discussed. Finally, the paper looks at rule consistency between environmental and trade agreements.