The impact of international trade on the environment and society is comprehensively
Part 1 CCICED 2011 Annual General Meeting
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CCICED Annual General Meeting 2011
reflected through scale, structure, and technology effects. The scale effect means that larger-scale trade activities lead to more serious environmental degradation; the structure effect means that the in-depth development of trade activities promotes the upgrading and restructuring of industrial structures, thus exerting positive impacts on the environment; and the technology effect means that the specialized professional division of labor, advanced technology, and management experience introduced through trade, cause the reduction of pollutant per unit of output, thereby gradually improving environmental quality.
The environmental impact of international trade can also be viewed from the long- and short-term consequences it brings. In the long term, environmental pollution caused by international trade takes on the inverted U form; in the short term, as trading rivals are at different stages of development, the three effects—technology, structure and scale—are reciprocal and the impact of international trade on the environment and social development differs for each party. These effects are further expanded into several other hypotheses, such as the “Environmental Kuznets Curve (EKC)” hypothesis; the “race to the bottom” hypothesis; and the “pollution haven” hypothesis.
China and other developing countries have entered a critical period of industrialization and global green shift, generating much debate about the impact of international trade on the environment. Some have said that China is practicing “neo-colonialism,” robbing resources, occupying markets, and slowing global progress towards sustainable development. Others claim that China uses developing countries in Africa and Southeast Asia as “pollution havens” to transfer emissions by taking advantage of the lower local environmental standards and loose enforcement conditions. This causes host countries to “race to the bottom” as they lessen environmental standards to attract foreign investment; it’s a process that stifles sustainable development in the host country and, indeed, globally.
Whether true or not, such accusations are often expressed by more developed countries that are competing for markets and resources with China and are disturbed by its rising influence and appetite. Whatever the case, the social and environmental issues that are revealed are certainly worth closer examination. In a context of growing international globalization and trade liberalization, it is likely that the traditional laws of economics seeking optimization of resources will stimulate the transfers of industries among countries at varying technological levels and developmental stages. Research shows that industrial transfer has indeed occurred in international economic and trade development in the past, but hypotheses such as “pollution haven” and “race to the bottom” do not always hold true.
Indeed, industrial transfer can be the result of rising domestic production costs related to the adoption of stricter pollution standards in a developed country. Such industrialized
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countries have, through imports and investments, transferred pollution-intensive and resource- and energy-intensive industries to other countries, giving rise to the effect of “pollution havens.” H.D. Robinson1 revealed that the United States tended to import more pollution-intensive products, thereby replacing the domestic pollution-intensive industries in the exporting country. Mani and Wheeler2 discovered that the output ratio of polluting and clean industries in OECD countries is continuously dropping, while the import-export ratio of polluting industries is rising year by year; on the other side of the coin, the output ratio of polluting and clean industries of developing countries in Latin America and Asia is gradually increasing, while the import-export ratio of polluting industries is dropping. Low and Yeats3 have pointed out that in the course of global industrial transfer, as developed countries trade with developing countries, the concentration of pollution intensity in developing countries is higher.