Free Trade and the Environment Essay

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Free Trade and the Environment

Economic Implications of Free Trade

Throughout the academic discipline of economics, much attention has been lavished on the purely economic benefits of free trade as opposed to autarky. Economists have argued that both consumer and producer stand to gain from uninhibited international trade. The consumer gains access to greater quantities of a specific good at a more competitive price, while the producer is able to shift his resources into the economy’s comparative-advantage industries. In addition to static gains from trade such as increases in economic well being, free trade brings about dynamic gains as well, which further increase the expand the economic resources of the involved country.
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The debate in recent years has mainly revolved around the claim that increased trade undermines environmental quality, which has an especially significant effect in lower-income countries. The traditional rebuttal is that free trade allows developing countries to break out of the cycle of poverty and to increase in economic prosperity, thereby growing out of their environmental problems. It should be apparent that the latter argument is most conducive to free trade, and has thus been harped on by trade advocates, who insist that economic success enables a country to generate the revenue needed to enact stricter environmental regulations.

The raw data, which has been subjected to much analysis, can lead to either of the two conclusions; the primary question facing economists thus is one of direct causality. Has free trade ever been a direct cause of improvements or degradations in the environment?

Any study of the environment and economics would be remiss not to include a discussion of industrial emission standards and pollution controls, the main instruments through which decisions of environmental economics are most evidently manifested. Often, such regulatory controls are linked to international trade agreements.

One of the oldest theories is that due to differentials in environmental regulations among different nations, there will exist “pollution havens” where firms will move their operations in order to escape tight
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