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Assuming for the moment that worldwide environmental policies internalizing all pollution costs-backed by a Global Environmental Organization and a multi-billion dollar Green Fund to assist developing countries-are not readily forthcoming, how then should the conflict between environmental goals and trade liberalization principles be settled? For their part, environmentalists have developed long lists of amendments to the General Agreement on Tariffs and Trade (GATT) that they would like to see adopted. In response, free traders have honed their arguments responding to these suggestions and have added some counterclaims from the trade perspective.
Indeed, taxonomies of trade and environment problems abound. The standard menu of concerns usually includes: GATT Article XX reform, import prohibitions, export restraints, product standards, restrictions on production processes and methods, taxes and subsidies, unilateral and extraterritorial actions, and the use of trade penalties to enforce international environmental agreements. Unfortunately, analysis of these issues often leads to a convoluted debate over abstruse GATT concepts, dispute panel precedents, and terms of art. Rather than sorting out the trade and environment problems along lines of analysis that reflect this traditional thinking and follow the GATT's legal structure, this article analyzes the underlying concerns of environmentalists and free traders-environmental injury and unjustified trade disruptions, respectively-and proposes a new set of concepts and rules for making environmental protection and trade liberalization mutually reinforcing.
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