Free Trade or Sustainable Trade? An Ecological

Economics Perspective

Jonathan M Harris

What Is Free Trade?

• Harris: In practice, it is “simply the international application of an unregulated free-market system”

• “Holy trinity of concepts embodied in traditional economic thought”– Economic growth– Technological progress– Free Trade

Criticisms

• Unrealistic– Constant economic growth is impossible

• Increase in pollution

• Limitations– Short-term– Consumption gains as the sole measure

of social welfare

Short-Term?

“Gives no consideration to longer-term issues of sustainability, growth, and the social and institutional impacts of trading patterns”

Enemy of Sustainability?

“According to the logic of ‘free trade’, environmental legislation that restricts or taxes the flow of traded commodities… can be challenged as a barrier of trade”

GATT Article XX

Exceptions to trade rules for measures relating to conservation of exhaustible resources

UNREALISTIC

The Real Problem: Sustainability vs. Free Trade

Sustainability requires control over the market

Free Trade lets the market decide

Harris’s Circle

• Sustainability first means free trade second

• Free trade cannot be the second priority

• It is unrealistic to keep it as the top priority

What About a Compromise?

WTO Committee on Trade and Environment 1996

Failure to resolve differences in opinions among delegates

No proposals for modification of WTO rules

VERDICT: FAIL

Current Ideas

Broaden Article XX

WTO recognition of multinational environmental agreements

Trade measures

Why Compromise Can’t Work

• Free trade requires constant growth

• Environmental protection would disrupt this

Conclusion: Free trade cannot be the basis of sustainability

The Environmental Kuznets Curve Principle (EKC)

Environmental damage increases initially

Starts to diminish after the nation hits a “Turning Point”

Flaws

1. Tests of this are limited

2. “Turning Point” is highly variable

3. “Turning Point” is often higher than suspected

Global “Turning Points”

Nitrogen Oxides2079

Sulfur Dioxide 2085

Suspended Particulate Matter 2089

Further Issues of Free Trade

• Rising Inequity

• Undermining Community Organizations

Rising Inequity

Undermines Unions

The NAFTA Agreement (1993)

• Praised

• Commission for Environmental Cooperation (CEC)

• North American Agreement on Labor Cooperation (NAALC)

The Truth About the CEC

Little more than a statement of good intentions

NAALC’s Turn

POWERLESS

“Free” Trade

Intellectual Property Rights & Bioengineering

=Developed nations and multinationals

VsDeveloping nations

Conclusions

• Future of Sustainability

• Future of NAFTA

• The Future.

Future of Sustainability

Strategies included in trade policies and agreements

– Both globally and locally

Future of NAFTA

• Expansion of current policies

• More effective sanctions

The Future

“Freer Trade” ends

Trade evaluated socially and ecologically– Reflected by global and regional policy