INTRODUCTION We are now living in a globalized world with access to the most efficient technologies and products at the

most reasonable prices, but are we compromising on something most essential to our existence itself the environment? Years of research has only amounted to a fraction of the environmental change that has occurred in just the past few decades. While much has been done by the WTO and other national, regional and environmental bodies since the first anti-globalization protests in Seattle in 1999, there is need for greater international cooperation on environmental and trade issues. The line between domestic standards on environment protection in different countries needs to be blurred and coalesced. Here we try to understand Trade and Environment under different perspectives, analyzing the effects of various policies and events as we proceed and finally come up with a decision as to what can be done so that the twin objective of both global trade and environment sustainability can be met. TRADE vs ENVIRONMENT The benefits of free trade on environment are well known, the major ones listed below: 1. It brings technological and process innovation which results in better productivity and efficiency. 2. MNCs bring global standards to places where local alternatives may be environmentally less friendly. 3. Consumers are free to choose environment friendly or eco labeled products, thereby promoting their usage. 4. The abundant resources at one place may be used rather than exploiting the scarce resources at another, thereby maintaining ecological balance. In words of Paul Krugman - "international trade is really just a production technique, a way to produce importables indirectly by first producing exportables, and then exchanging them". However, global trade can have its own series of detrimental impacts on the environment because Everybodys business is nobodys business. Mentioned below are some of the negative impacts of trade on environment: 1. In order to reduce costs by mere fractions, goods may be imported from far off places which would result in consumption of more fuel and other natural resources. 2. Large scale economic activity to boost GDP results in overexploitation of resources and may lead to race to bottom in environmental standards among nations. 3. The GATT policy of "products, and not process" prohibits the discrimination of imports based on the methods of production. This induces producers to use the cheapest processes, which are generally environmentally costly, knowing that these products will receive equal treatment as those made with "ecofriendly techniques. 4. MNCs may shift their production facilities to countries where environmental regulation is less stringent. . The tuna-dolphin dispute between the U.S. and Mexico is one of the most famous examples where international trade policy under the GATT collides with the domestic environmental policy. The solution to it seems having national environment checks and barriers in place, but this again can have its own negative impacts. Governments may formulate their environment acts and laws such as to impose some sort of trade barriers, thereby altering altogether the whole construct of free trade. WTO AND THE ENVIRONMENT The WTO is equally solicitous and has several agreements and policies in place to keep a check on the detrimental impact of trade on environment. The 1995 Marrakesh Agreement seeks to protect and preserve the environment and allows exemption of environment related issues from trade regulations under Article XX. The 2001 Doha Communiqu started a new round of negotiations: the aims of open and non -discriminatory trading system, and acting for the protection of the environment must be mutually supportive. There is a special Committee on Trade and Environment CTE which is responsible for covering the intersection of the environment services, goods and intellectual property. There are also a growing number of Multinational Environment Agreements MEAs wherein different signatories agree to specific trade obligations and

negotiations. Besides these, WTO has complaint panels and expert panels which look after to resolving disputes arising between different countries. Although, the WTO works under a structural framework, there are many loops and holes which are taken advantage of by different countries to restrict free trade movements in some cases and environmental hazards in others. For example when Canada and US planned to use WTO to challenge Europes decision of not continuing food that contains Genetically Modified Organisms, or when Eco labeling and Green Procurement was threatened by the WTO. WTO is often accused of being an intrusive undemocratic bureaucracy because some of the member countries have a disproportionate weight or control. But it can also be argued that giving equal weight to all would mean that even the least developed and the least efficient would try to shape up policies in their own favor giving lower priority to the environment. CONCLUSION & DECISION In the light of above facts and arguments, we can safely conclude that both free trade and environment sustainability must go hand in hand. Whether the effects of trade on environment are detrimental or beneficial depends on what measure of environment quality is at stake. So if we talk about importing highly efficient automobiles in India we will definitely contribute less to emissions of pollutants such as SO 2 when we drive them, but the transportation of such vehicles from Japan or US etc. will definitely add more CO2 to the environment. However, if certain checks are put in place free trade is definitely going to be an advantage to environment sustainability. Let us have a look on some economic/environment/trade win-win situations: 1. US ended the restrictive 1980s tariffs & quotas on Japanese auto imports, benefiting both the consumer pocket & the air quality. 2. USG proposal for the Doha round - liberalize capital equipment and services used in the environmental sector. 3. A global ban on subsidies to fossil fuels would reduce carbon emissions, and reduce government deficit and economic distortion. Thus trade, environment and economic prosperity can go hand in hand provided they have effective institutions of governance in place. THE WAY FORWARD: 1. There is a need for greater international cooperation on environmental and trade issues, which must be addressed by means of incentives or by sanctions, whichever way it seems possible. 2. Penalties or heavy duties can be imposed on carbon intensive imports to discourage there consumption. 3. A distance based tariff can be imposed specially in transfer of non essential goods, to discourage transportation of such goods from very distant places. 4. The national standards must not come in way of free trade; instead the international standards must be modified to take different nations into consideration which may be somewhat subjective in nature. 5. NAFTA1 can be taken as a reference agreement to formulate trade policies with some tradeoffs.

Environmental problems may be reinforced by trade policy but they are best resolved by environmental policy which suggests the need for mutually reinforcing trade and environmental agreements between countries, which often involves tradeoffs for e.g. slightly less agriculture output in return for clean water; slightly more erosion in return for farm exports/income. Such arrangements were provided for in the environmental agreement included in the North American Free Trade Agreement. This agreement insisted that the member countries should adhere to certain environmental standards, and saw the formation of the trilateral Commission on Environmental Cooperation, which also had the authority to oversee and enforce these regulations.