Trade Protectionism and Environmental Regulations: The New Nontariff Barriers

Runge, C. Ford | January 1, 1990

This article reviews some economic and legal aspects of the growing role of environmental, health, and safety regulations operating as disguised barriers to trade. While this has always been a recognized problem in trade policy, the issue has gained new force as environmental policies move to the forefront of many national agendas. Because environmental standards have a growing national constituency, they are especially attractive candidates for disguised protectionism. International distinctions in the tolerable level of environmental risks are created because the weight attached to environmental standards tends to vary with the income levels of different countries. Incentives are created to move restricted product and processes into areas of lax regulation, notably developing countries, while denying import access to countries that may not subscribe to the regulatory policies of the developed countries. Without multilateral action, environmental standards become sources of trade tension.