International trade, factor movements, and the environment

by Michael Rauscher

Trade and the environment has become a major area of international political dispute. This study investigates the interdependencies between environmental policies and international trade policies. Does liberalization of international goods and factor markets cause environmental disruption and welfare losses? Will countries institute lax ecological regulations to favour their domestic producers? Should trade restrictions be used for environmental reasons and can environmental policy instruments be used to achieve trade-related objectives? Should there be what the author terms a 'green GATT'? The approach is mainly theoretical, and uses traditional trade models like Heckscher-Ohlin as well as non-competitive models of the 'new' trade theory and public choice. Some other important but often-neglected aspects, such as trade in hazardous waste and the foreign-debt problem, with the possibility of debt-for-nature swaps, are also considered. Finally, International Trade, Factor Movements, and