Trade and the Environment: Implications for Climate Change

Abstract

The Fourth Assessment Report (AR4) of the IPCC has given a warning to the global community about the consequences of global warming and climate change resulting from burning of fossil fuels during the last 150 to 200 years. This is also a growing concern in the agenda for trade negotiations. International trade contributes to economic growth and benefits participating countries. In turn, growth increases the demand for environmental quality and can provide the financial resources for the protection of the environment. It is commonly assumed by economists and environmentalists alike that greater economic openness will lead to increased environmental damage in the developing countries. Thus trade and environmental objectives can be in potential conflict. These conflicts can weaken the trade system and become an obstacle to sustainable economic development. The impact on the environment of rapid growth of an economy driven by trade, especially the pollution of the atmosphere, which has led to global warming and climate change, needs in-depth investigation. Based on the experience of recently growing economies of Asia - India, China, Indonesia, Thailand, Vietnam, etc., this paper addresses this important issue. Liberalization of trade has been the main driver and cornerstone of the growth of these economies. This rapid economic growth, largely based on industries, and the significant changes in trade patterns that this brings about has important implications for the environment especially with respect to the burning of fossil fuels. Based on several case studies, this paper reviews the nature of the link between trade and environment in these countries and the implications for climate change.