| Debates over "globalization" have been going on for some time, but nowhere has the divide between the two views of globalization been more apparent than discussions conserning trade liberalization and the environment in recent 20 years. Environmentalists and the trade policy community have squared off over the environmental consequences of liberalized trade. This debate was fueled by negotiations over the North American Free Trade Agreement (NAFTA) and the Uruguay round of General Agreement on Tariffs and Trade (GATT) negotiations. Liberalists saw the WTO as a step forward because of its improved dispute settlement procedures and because it supplied a gap in previous trade agreements. Environmentalists, however, were disturbed by the intrusion of trade agreements into what many thought were purely domestic matters.In the meantime, along with the constant deepening of China's reform and opening to the outside world, China has achieved great economic results which have attracted worldwide attention. The development of trade especially the rapid development of the industrial products'export contributes a lot to the development of China's GDP. However, at the same time, there is a problem which should not be ignored that our environmental condition keeps getting worse. The deteriorating environmental condition has already caused a lot of problems to people's work and daily life, the emergence of green trade barriers also keeps bringing new challenges to our country. It seems almost certain, in the long run, the environmental deterioration will restrict China's development of trade and economy seriously. Given the concerns mentioned above, the study on the relationship between China's trade and environment is of profound theoretical and practical significance.The purpose of this paper is to study the interaction between international trade and the environment in China using both economic theory and empirical analysis. Following the change of central issues, we focus on three aspects of their relationship.Firstly, we consider the environment effects on international trade, including the expansion of the H-O Theory, changes on the welfare effects of trade, and the environmental regulation effects of competitiveness.Secondly, we focus on the roles of international trade and its policies while solving the pollution problems. For example, we analyze the effectiveness of trade policies on eliminating domestic and transboundary pollution,and consider trade-environment linkages in international environment cooperation.Thirdly, we pay close attention to two key channels through which trade can affect the environment. One is via its effects on the level, or scale, of economic activity, another channel is via a composition effects—a change in the mix of economic activity in countries, caused by trade. Addressing the first question, we have to admit that international trade leads to a greater scale of economic activity—be it transportation services, more production of goods and services, or more consumption—and that economic activity per se harms the environment, however, it also affects incomes and lower the dirtiness of production techniques. Its full environmental impact can only be resolved through careful empirical investigation. As the second question, in the developed countries'view, it is has been generally maintained that even if trade liberalization had no effect on the scale of economic activity or on the dirtiness of the techniques of production, it could create pollution havens in the developing world by altering the composition of their output toward dirty goods. However, this issue needs strict hypothesis and lacks of necessary data support, so we try to give a quantitative result basic on China's trade data.In the end, differences of opinion will of course remain because the relationship between international trade and the environment are still not fully understood. But we hope to give an integrated framework to the further research on the problem of China's trade and environment.
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