Free trade can benefit environment

With the help of biologists and in a radical reversal of roles, the environment could exploit free trade. But with the World Trade Organisation`s legitimacy being challenged as never before, this opportunity is at risk.

“In the prevailing climate, trade protectionism gets equated with environmental protection, free trade with freedom to plunder”, says Dr Douglas Yu at the University of East Anglia`s School of Biological Sciences. “But the WTO could actually drive fundamental environmental reform”, he says.

In a paper to be published in Trends in Ecology & Evolution in June, Dr Yu and co-authors Prof William Sutherland and Prof Colin Clark challenge biologists to help with the greening of the WTO. “Biologists are notably absent in this debate, but as shown in a high profile legal battle over sea turtles between the US and the WTO, their expertise can be crucial to helping resolve conflicts between trade and the environment”, says Dr Yu.

Current public perception is that free trade is harmful to environmental protection. The demonstrations at the 1999 WTO meeting in Seattle showed this, and standard economic theory backs it up. Trade exacerbates the unsustainable exploitation of natural resources, such as when fish from countries with an unregulated fishery are exported to those with fishery regulations. This is why environmental organisations have called for the WTO to allow `green protectionism`1, that is, the ability to deter imports of unsustainably exploited natural resources.

But according to the authors, government efforts to promote domestic industries with outright subsidies are even more harmful to the environment. For example, when fisheries started to decline, subsidies were introduced to relieve the industry`s economic problems. But this increased the number of fishermen and depleted stocks even further. Today, excess fishing capacity exists worldwide, leaving many formerly productive fisheries in collapse.

Now economists suggest that had the industry been left to find its own balance, fish populations would not have been exploited to extinction. Catch rates would have declined to such low levels that further fishing became unprofitable.

There are many examples of perverse subsidies that are both costly to the taxpayer and cause environmental damage. But the beneficiaries such as fishermen and farmers are politically powerful, and the subsidies live on despite repeated attempts to kill them off. “Just look at this month`s US farm bill. It completely reverses the 1996 `Freedom to Farm Act` that was meant to wean farmers off payments.” says Dr. Yu.

The WTO has clear rules for identifying and removing perverse subsidies but they have not been applied. This might now change. The latest Doha Round of WTO negotiations explicitly targets fisheries subsidies and agricultural export subsidies, which hurt developing world farmers. Biologists can contribute to the Doha Round by calculating the environmental effects of different scenarios for reducing subsidies in agriculture, forestry, energy, mining, and especially fishing.

“If applied, WTO rules on subsidies could provide a way to reduce or remove some environmentally pernicious public policies”, says Dr Yu. “Only negotiations at the level of the WTO are likely to have an impact. Eliminating perverse subsidies of all kinds could yield great economic benefits, both in terms of reducing overexploitation and stemming the waste of taxpayers` money”, he says.