International trade and the protection of the environment

Abstract

"The need to ensure that trade and environment policies are mutually supportive is more pressing today than ever before. However, successful integration of these policies can only be achieved through a constructive dialogue based on far broader awareness and understanding of the complex interlinkages between trade and our environment." (Dr. Klaus Topfer Executive Director, UNEP) World trade and foreign investment have grown dramatically over the past 25 years, serving as major drivers for global economic growth. This process, often referred to as globalization, involves the integration of national economies into a single market for goods and services, and for capital and investment flows. Globalization has emerged as trade and investment liberalization policies have become prominent features of restructured national economies throughout the world, substantially removing national market boundaries and linking countries into a single world economy. With this acceleration of global trade, countries throughout the world have benefited from more investment, industrial development, employment and income growth. Recently however, there has been increasing concern over the potential negative impacts of globalization on the environmental and natural resources, particularly of developing countries where trade has grown most rapidly. The increased trade and investment in natural resource-based economic sectors is placing unprecedented pressures on the world's ecosystems. Countries have found that economic activities supporting rapidly expanded trade can result in serious environmental degradation when complementary environmental policies are not in place. Unless appropriate action is taken, such degradation can spark a progressive spiral of decline for national development. Pollution of air, water and soil, and unrestrained natural resource exploitation, may grow to levels that jeopardize sustainable development efforts. Trade could thereby become unsustainable with its future potential significantly compromised since trade benefits related to investment, industrial development, employment, income growth and enhanced social development could be substantially offset by negative environmental aspects.