On The Relationship Between Trade And Environmental Policies

With the development of economic globalization, international trade, a necessary sector of one economy, has more and more important effect on its economic development. However, globalization leads to the huge changes of the world ecosystem. Domestic, regional and international environmental problems are coming up, which are having huge impact on the economic development of the countries and the world. In this paper, it will make a conclusion about the principles to harmonize the relationship between trade policies and environmental polices, between multilateral trade agreements and multilateral environmental agreements, through the analysis of the interconnection between trade and environment.On the basis of former research, applying the methods of theoretical and empriral analysis, the author makes a conclusion that there is a close correlation between trade and environment. Thus governments must consider the fact, especially during the negotiation of multilateral trade agreements and multilateral environment agreements. The government should harmonize the relationship between trade polices and environmental policies with the view of sustainable development, and strengthen the international cooperation in the aspect of trade and environment, and provide the optimal path of economic development. Moreover, the economy may choose the proper process of international cooperation according to its revenues. Peoples' Republic of China became the member of World Trade Organization in 2001. It is important to decide the strategy and measures in the new round of WTO.There is three parts in the paper, to deal with three problems. The first is the effects of environment on trade; the second is the effects of trade on environment; the third is the relationship between trade polices and environmental policies.In the first part, environment, as a special factor, will change the endowment of one economy's resource. When the government use the polices to improve the externalities resulted from environment, the changes of the factor endowment of one country will adjust the patterns and structures of foreign trade. As the requirement of high-quality environment will increase with the higher income, the tradable commodities will change in the aspect of the quantity and quality. In the first chapter, it is introduced that free trade and trade polices give impetus to economic development. Moreover, there is introduction of the history of environmental problems and the common sense of environment. In the second chapter, it is suggested how to deal with environmental problems through the analysis of the their causes and to analyze the direct and indirect effect of environment and environmental policies on trade. In the third chapter, it illustrates the changes of multilateral trade system due to the environmental problems. For the second part, trade is considered as the action to export the goods with comparative advantage and import the goods with comparative disadvantage. Trade is the result of international specialization. Domestic production will change due to international specialization. The adjustment of domestic production will change the use of environment as a kind of resources and enlarge the quantity of environment as wastes, which will lead to the adjustment of the ecosystem and degraded ecological system. Trade will result in the efficient allocation of the resources and decrease the quantity of available resources. It is suggested to analyze the impact of trade on environment, provide the basic principles of the environmental assessment of trade policies, and introduce the improvement of multilateral environmental agreements according to the rules of international trade.In the third part, it is implied that there is a close correlation between trade polices and environmental policies. Government, as an egoist, will deal with trade and domestic environmental problems separately. In order to reach altruism objectives, government must harmonize the trade polices and environmental polices. At present, environm...