Electronic waste, non-invasive species, and Middle-East trade–environment policy-making – these are just some of the unusual topics covered in Kevin Gallagher's new Handbook on Trade and the Environment (hereafter HTE). This eclectic collection introduces the reader to a broad set of issues related to the trade and environment debate. As Gallagher states in his introductory chapter, the book is not meant to be exhaustive. Instead, it is meant to be ‘comprehensive’ in that it covers a wide variety of issues from a number of different disciplines and viewpoints. This sets it apart from other in-depth comprehensive economic literature reviews, such as Copeland and Taylor (Reference Copeland and Scott Taylor2004), or collections of seminal economic studies, such as in Dean (Reference Dean2001) .
The strengths of HTE are in its diversity of topics and disciplines. While some chapters cover well-known topics, such as pollution havens or environmental Kuznets curves, the reader will also find chapters on shipping waste, investor rights, international industry standards, fair trade, and much more. The authors include economists, lawyers, international relations specialists, political scientists, environmental scientists, technology policy experts, and more. While most topics are only addressed in a single chapter – and thus from a single perspective – multiple chapters on foreign direct investment (FDI) and the environment and on shipping/transport and the environment yield a more cross-disciplinary look at these two issues.
The same features that give HTE its strength also underlie its weaknesses. The diversity of disciplinary approaches means that economic evidence is sometimes not reviewed or presented. This can be frustrating when emotionally charged economic claims are made that require analysis of the arguments and evaluation of evidence. In some cases, the authors seem unaware of the scope of economic research on a topic, leaving the reader with the idea that a specific issue is largely unexplored. In other cases, a passionate conclusion about an issue is made, with no attempt to address the large body of economics literature that provides arguments and/or evidence to the contrary. Nevertheless, HTE does have much to offer.
The book is organized into three parts: (I) trade and environmental quality, (II) trade and environmental politics, and (III) trade and environmental policy. An introductory chapter by the editor provides an overview of the entire book and a brief introduction to each part. Part I is comprised of 11 chapters covering some of the more conventional economic topics found in most reviews of trade and the environment. The editor's introduction to Part I gives a brief description of some of the fundamental issues, but that discussion is somewhat murky, with some key elements left out or described incorrectly. The uninitiated reader might use the chapters by Copeland, Van Alstine and Neumayer, and Barbier to provide an overview of key concepts and empirical findings in this debate. Copeland provides an excellent introduction to arguments regarding environmental regulations and trade ‘competitiveness’ as well as the pollution haven hypothesis in Chapter 4. A longer more detailed treatment can be found in Copeland and Taylor (Reference Copeland and Scott Taylor2004) . Alstine and Neumayer provide a very accessible introduction to the environmental Kuznets curve concept and some review of evidence. The chapter by Barbier provides a clear overview of key issues regarding development and natural resource dependency.
Zarsky (Chapter 6) examines two central arguments regarding FDI and sustainable development: that FDI generates spillovers of knowledge, technology, and expertise that contribute to social and environmental benefits; and that the capture of these benefits is not automatic but requires strategic and proactive government policy. This chapter does review some of the economic evidence and provides more of an analytic framework for investigating the two hypotheses than can be found in other parts of the book. While some of the arguments seem to border on straw men (such as the claim that a ‘central promise of FDI is that it will promote not just economic growth but the growth of more environmentally sustainable industries in developing countries’, p. 87), overall Zarsky presents some good analysis and reviews some of the key contributions (from Moran, Smarzynska-Javorcik, and others) in this literature. Kelly Gallagher (Chapter 11) investigates the hypothesis that FDI will bring cleaner technologies to developing countries, enabling technological leapfrogging. She uses evidence from China regarding US auto firms to argue that firms did not ‘automatically’ transfer state-of-the art technologies to China, but that Chinese policies were required to induce such transfers. While this chapter presents some very interesting evidence, some of the discussion is blurred by the lack of distinction between foreign firms' production process technologies – that are indeed quite often cleaner than local firms – and foreign firms' product standards, which may not meet the state-of-the-art requirements that the author seeks. It also again seems to set up a bit of a straw man, since most economists would not argue that such transfers are ‘automatic’ nor that Chinese environmental policies do not matter.
Chapters 1 and 2 illustrate the unusual and interesting topics that are found in all three sections of the book. In Chapter 2, Corbett and Winebrake provide a detailed discussion of the energy and environmental impacts of ocean shipping, emphasizing that these issues cannot be understood or addressed appropriately unless they are discussed within the context of international goods transportation. In Chapter 1, Costello, Lawley, and McAusland explore policies designed to stop the entrance of non-invasive species (NIS), which can cause environmental, economic, and health externalities. Unlike more common environmental problems (e.g., water pollution), entrance of NIS occurs largely because of trade (e.g., directly via horticultural imports, or indirectly or accidentally via packaging, shipping containers, or even tourists). Even though trade policy may be a more appropriate tool to deal with NIS than with other environmental problems, the chapter shows the importance of considering the characteristics of the NIS problem, as well as the choice of pre-emptive and reactive policies, when trying to design optimal policy responses.
Part II includes seven chapters on the politics behind trade and environment issues such as GMOs and the NAFTA side-agreements, as well as analysis of the roles of government, non-governmental organizations (NGOs), civil society, and other participants in the political debates on trade and environment in the EU, Latin America, and Africa. Here the reader will find valuable information on many topics not usually covered in the economics literature. While there is much on political strategy, bargaining, etc., economists will be left wanting more analysis of the policies themselves from a cost–benefit point of view.
Several of the chapters either directly or indirectly relate to standards. In Chapter 12, Clapp reviews many different types of international mechanisms that have arisen to provide ‘certification’ of the greenness of industrial products, such as the ISO 14000 standards. Clapp reviews some of the arguments regarding the effectiveness of these systems in improving firm's environmental performance. But no empirical evidence is provided. She concludes that most of these systems probably have limited impact because they are voluntary. In this context, it would have been nice to see a good discussion of the benefits of using carrots rather than sticks to encourage better environmental performance. The economics literature related to international environmental agreements and to eco-labeling have much to say on this subject. But this literature was untapped.
DeSombre explores the problem of pollution from shipping itself, treating it as a common pool resource problem (Chapter 16). She argues that states offering ‘flag of convenience’ registries do not hold ships to high environmental standards. Thus, the growth in these types of registries has exacerbated ocean-related environmental problems. She then goes on to discuss the ‘club good’ features of ports, which allow port state control to counteract these trends and improve the pollution standards observed by ships. This is an illuminating discussion, involving a kind of international voluntary standard of port control not dissimilar to those discussed in Chapter 12, but one that is clearly having a significant impact.
Also somewhat related to the question of standards is the issue of electronic waste (‘e-waste’). In principle, recycling of old computers, cell phones, etc., is desirable. So is trade in recyclable e-goods, as it allows cheaper access to these goods in developing countries. But recycling these products exposes those doing the recycling to dangerous chemical substances that have serious health risks. Thus, trade in e-waste indirectly shares some characteristics with trade in hazardous substances. Pellow (Chapter 18) offers a good overview of this problem and the role of NGOs and other national and international actors in resolving it. Unfortunately, he sometimes blurs the discussion by not distinguishing sufficiently between the hazards that are due to production of electronics vs. those from discarding them in landfills or recycling them. For purposes of understanding the role of trade or the best policy responses, these distinctions are important. Pellow reviews progress on sharing information on toxic substances with importing countries, as well as new efforts to make the producers of the e-good obligated to recycle the original products themselves. Economists will be left wishing for more discussion on the trade-offs between these two types of policy responses – particularly if developing country importers want access to these recyclable e-products.
A less successful investigation into international standards is Chapter 17, by Raynolds and Keahey, on the fair trade movement. The authors make strong claims about the success of this movement in providing farmers with ‘better prices, stable market links, and resources for social and environmental projects’ (p. 213). But nowhere do the authors provide data to support their arguments. Nor do they offer any analysis of the costs vs. benefits of the movement. For example, prices seem to be considered ‘better’ just because they are higher. But if agricultural prices are low because of marketing boards, exorbitant export taxes, oligopoly power, or other distortions, the fair trade movement will not correct those distortions, and farmers will still not be receiving a ‘fair price’. Resources for social and environmental projects are certainly desirable, but has the fair trade movement been the best vehicle for providing these resources? Are there more efficient and/or more effective ways of achieving this objective? Despite these frustrations, the chapter offers the reader a good overview of the actors in this movement, and the goals they hope to achieve.
At the heart of the trade and environment debate for many developing countries are concerns regarding sovereignty over shaping their own environmental priorities and standards. Developing country representatives are quick to point out that diversity in environmental standards is often desirable in addressing environmental issues across countries of different income levels and with different preferences and priorities. In HTE, this tension often surfaces but is left unacknowledged. The authors present passionate calls for maintaining developing country sovereignty, while simultaneously calling for mandatory international agreements on product or process standards, or arguing that ‘weaker’ standards are wrong. These tensions arise more frequently in Parts II and III.
Part III is comprised of eight chapters on trade and environmental policy. The opening chapter by Charnovitz provides an overview of the interaction of trade and environmental policy from a legal standpoint. Most of the chapters in this part also focus on the more legal, political, or institutional aspects of policy questions. While there is valuable information on the relationship between intellectual property rights, investor rights, innovation, and the environment, the reader interested in economic analysis of the costs, benefits, and effectiveness of policies in achieving objectives will have to look elsewhere.
Ackerman's discussion of the EU chemicals policy (Chapter 23) is one of the few in HTE that explores the impact of environmental policy on trade. He recognizes that imposing rich country product standards can impose costs on poorer countries. Thus, he provides cost estimates for REACh (‘Registration, Evaluation and Authorization of Chemicals’) compliance and tries to assess their impact on EU companies, on developing country exporters, and on US exporters. He concludes that compliance costs for EU producers will be extremely small in relation to the value of the EU chemicals market. He also argues that most of the cost of REACh compliance in developing countries will fall on large corporations in the mining sector who can easily afford it. Ackerman does acknowledge that there are industries such as essential oils where REACh might have large impacts on some developing countries' export earnings. But he argues that these are the exception rather than the rule.
Cherfane's discussion of trade and environment policy-making in the Middle East (Chapter 25) offers a refreshing alternative perspective. While focusing largely on the political actors and policies in the region, Cherfane highlights the fact that many in the Middle East share concerns with other developing countries that non-tariff barriers, including those implemented for health and safety concerns, might have serious consequences for the competitiveness of developing country exports and for market access. Her discussion highlights the differences in environmental and economics priorities for rich and poor countries, and in the costs/benefits of harmonization of various environmental standards.
A reader might be tempted to characterize HTE as ‘anti-globalist,’ or as purposely pitting trade and the environment as enemies. Though some chapters fall prey to this on occasion, such a characterization would sell this book short. HTE is a good source for those looking for a better understanding of political issues, of legal debates, and of the state of discussion between government, industry, NGO, and private sector groups on topics that are not often treated elsewhere. The reader mainly interested in learning about the economics of the debate can gain some understanding in Part I of the book, but for an in-depth understanding of the economics of these issues, the reader will have to look elsewhere.
