How Does Trade Affect the Environment?

History is full of examples of how globalization has affected environmental outcomes. Human migration has profoundly affected the natural environment. Much early trade was commodity based— trade in fish, agriculture, timber, and other raw materials all caused exporting countries to increase their exploitation of the natural environment beyond the level that would have occurred to satisfy local consumption demand. Nevertheless, it is only during the past 20 years that the interaction between trade and the environment has become a subject of sometimes heated public policy debate. This has been motivated by a variety of forces that have recently converged. A growing concern about the seriousness of environmental problems has prompted environmentalists to look at the role of globalization in contributing to pressure on the environment. An increase in the reliance on rules-based institutions to support and manage international trade and investment has increased the scope for conflicts between what used to be thought of as domestic policy (such as environmental regulations) and international trade and investment policy. And the rapid growth of international trade and investment flows has increased concerns about competitiveness and market access, both of which are sometimes seen to conflict with environmental policy.