Green Barrier to Trade.doc

Green Barrier to TradeIn recent years, environmental problems are becoming serious and attract the attention of different countries. Many countries have set off a green wave to protect the environment and the new type of non-tariff trade barriers-green trade barriers spring up. Green barrier to trade (GBT) often makes developing countries suffer since developed countries use GBT to confine imports (Chandrasekhar, Ghosh, and Pal 2006). One of the strongest methods to prevent domestic markets from foreign impacts is GBT (Lee and Chen 2011). The reduction of unreasonable GBT could promote trade liberalization and protect the rights of less developed countries. So, the study about GBT is necessary for international trade development. This article will analyze the causes and impacts of GBT, and give some recommendations.There are different definitions on GBT, but these differences are slight. GBT is usually set by advanced countries legally and seems to be appropriate because it is under the slogan of promoting ecological harmony and human health (Lee and Chen 2011). In fact, GBT is for the sake of protecting advanced countries home industries and decreasing competition pressure. Countries implement GBT through several major forms, such as Green Tariff, Green Standards, Package Requirement and Sanitary and quarantine inspection system (Sargent 2006). The following is about the causes of GBT. The first reason is that international trade negotiations are tough to succeed and international conventions are imperfect. Different environment and trade legislations of diverse nations bring about the lack of strong and unified rules in the global trade (Dunoff 1992). These various legal standards strengthen the difficulty of global negotiations. In addition, many advanced countries failed to perform their promise of reducing trade restrictions or made use of GBT (Chandrasekhar, Ghosh, and Pal 2006). These behaviors of breaking agreements further damaged the rules and success probability of multilateral negotiations, which renders GBT more difficult to solve. Table 1 Previous Doha RoundYearMain Contents and Outcomes1997-2000Talks start in agriculture, services, and intellectual property.Big different opinions on the negotiation issues.2001Doha Development Agenda launched. Passed the “Ministerial Declaration”.2003Cancun ministerial mid-term review.No substantive outcomes2004“Framework” agreed2005Hong Kong Ministerial Conference.Suspension of negotiations2008The July 2008 package; Revised draft modalities in agriculture and non-agricultural products. Negotiations failed.Source: World Trade Organization Database.Table 1 provides the information of the Doha Round, which is the latest round of trade negotiations within WTO member countries. The Doha Round focuses on reducing tariffs, improving trade environment and accelerate trade progress of developing nations. It can be seen that the Doha Round for years has not obtained significant outcomes, except for 2001 and 2004. These achievements majorly refer to reaching agreements on the “Ministerial Declaration” and “Framework”, which are comparatively oral files lack of practical meanings. Generally speaking, the Doha Round had no effective progress. Too large divergence among members mainly results in the failure of the Doha Round, which makes the reduction of GBT even harder.Another reason is that peoples ecological protection awareness has been improved. Environmental problems constantly draw the public attention. Under the public pressure, advanced states realized the importance of taking measures to protect environment and gradually some GBT appeared (Sargent 2006). Graph 1 Kuznets Curve Per capita GDPPollution degreeGraph 1 shows the Kuznets Curve (Esty 2001) which denotes the connection between economic development and pollution. It can be observed that in the process of industrialization, the degree of pollution keeps rising along with the increase of per capita GDP; with further growth of per capita GDP, pollution presents the downward trend. Under the current pollution situation, most nations are on the left side of this curve. Many countries propose environmentally-friendly trade steps, like GBT, to slow down the pace of economic and trade advance.Trade protectionism is also a crucial cause. With intense competition and all sorts of tariffs and non-tariffs measures limited, certain advanced nations take legitimate trade restrictions to lessen imports (Sargent 2006). These methods of trade protectionism go against trade freedom and increase GBT. Table 2 Current Agricultural Tariff Structure of Certain CountriesNationNumbers of Tax ItemsAverage MedianStandard DeviationDeveloped CountriesUSA167013.64435.09EU362827.8513.9440.59Japan177753.2712160.32Switzerland217267.8614.68141.79Norway126969.726.63137.37Canada133922.11366.83Developing CountriesIndia685112.8610051.58Kenya6351001000Indonesia68547.154022.4Chile68526.05255.84Thailand37835.633027.05China68515.721311.17Source: UNCTAD, TRAINS Database and WTO IDB Database.Table 2 shows the current agricultural tariff structure of some developed and underdeveloped nations. As can be observed, developed countries have a large number of high tariffs and low-rate tax items while underdeveloped countries have relatively simple structure. Tariff rate and tariff discrete degree of developed nations are generally higher than those of developing nations. The complex tariff structure of advanced countries is a representation of trade protectionism to some extent. Advanced nations adopt various tax items, some of which form GBT, to defend its own market and lower pressure from competing with developing nations.Differences of technology and environmental standards among countries give rise to the formation of GBT. The higher criterion of developed nations could turn into discrimination to developing nations (Sargent 2006; Esty 2001; Lee and Chen 2011). Underdeveloped countries can not reach the high requirements so that they might lose some international market share. Accordingly, the developed states could defend their own relevant industries with using GBT.GBT has some adverse effects on export countries. Developing nations that are usually exporters are often put at an inferior place (Lee and Chen 2011; Dunoff 1992; Sargent 2006). GBT constraints exports, adds exporting costs and weakens competitiveness of exporting nations. Besides, GBT has some positive influences on international trade. GBT can encourage enterprises to cut down pollution in the production process and promote environment conservation (Sargent 2006; Dunoff 1992). In general, GBT has more harm than good for less developed nations and is not favorable to the development of global trade liberalization.As a part often appearing in the national negotiations, GBT is a hot topic in the field of international trade. Through the exploration about reasons and effects of GBT, this text provides a more clear understanding of relevant researches. The failure of multilateral talks, the exaltation of environmental consciousness, trade protectionism and the discrepancy of national technology levels can generate GBT. GBT have both pros and cons. From the perspective of developing nations, the influences of GBT shortcomings are larger. There are some recommendations for exporters to deal with GBT: improving the quality of products to meet high standards; strengthening cooperation with other countries and using the global power to repel GBT; publicizing the idea of the environment protection and establishing a overall legal system to regulate the trade environment. ReferenceChandrasekhar, C. P., Jayati Ghosh, and Parthapratim Pal. 2006. “The Green Barrier to Free Trade.” In Tracking the Macroeconomy, eds. C. P. Chandrasekhar and Jayati Ghosh. Hyderabad, India: ICFAI University Press, 98-108.Dunoff, Jeffrey L.1992. “Reconciling International Trade With Preservation of the Global Commons: Can We Prosper and Protect?” Washington and Lee Law Review 49(4): 1407-1454.Esty, Daniel C. 2001. “Bridging the Trade-Environment Divide.” Journal of Economic Perspectives 15(Summer): 113-130.Lee, Chen-Kuo, and Tony Chen. 2011. “The Study on the Green Barrier to Trade under the Multi-Trade System.” The Journal of American Academy of Business 16(March):122-129.Sargent, Thomas J. 2006. “Green Barriers Trade and its Influences on Chinas Foreign Trade.” Journal of Economic Surveys 11: 24-25.