Impact Of Environmental Regulation On Trade

Since environmental protection is gaining more and more attention, trade and environment issue has become increasingly prominent. Countries and regional organizations have adopted much environmental regulation. These measures are also been used by protectionists to impact international trade. China is a fast-developing country, foreign trade and environment conflict appears particularly prominent. Participating in the process of economic globalization, how to face the challenges of the environmental regulation, how to coordinate our environment and trade relations and realize the sustainable development of foreign trade, for China's economic development and social progress is of great significance.Using the basic theories of Economics, Trade and Econometrics, this paper analyses the environment and trade conflict, the impact of international environmental regulation on trade. Based on theoretical analysis and conclusions of experience, this paper precedes suggestions to perfect China's system of environmental regulation.This paper's main views are summarized as follows:1. The conflict between trade and environment is mainly caused by the externality of production. One important role of environmental regulation is to internalize environmental costs, thereby eliminating its externality.2. In the short term, environmental regulation may have a negative impact on trade. For example, export costs increase, pollution-intensive industry face challenges, higher environmental standards restrict market access. However, in the long run, environmental regulation can help the developing countries to enhance environmental awareness, make full use of the innovation advantage and first-mover advantage, and improve the competitiveness of products, and optimize trade structure, so as to promote the sound development of foreign trade.3. To promote the foreign trade, China shall improve its environmental regulation, such as perfecting the means and policies of regulation, improving the environmental system of technical regulations, standards and certification system, coordinating the management system.