Basic attributes of trade and environment: What do the numbers tell us?

~ : .41

'"

:~7

ECOLOGICAL ECONOMICS ELSEVIER

Ecological Economics 19 (1996) 19-33

Survey

Basic attributes of trade and environment: What do the numbers tell us? J a m e s R. L e e * School of International Service, American UniL~ersiO', Washington, DC 20016, USA

Received 5 November 1995; accepted 15 May 1996

Abstract This paper analyzes 79 categorical case studies in trade and the environment to determine basic attributes of the field. It intends to describe these attributes, organized into four intellectual clusters, in order to set some basic standards for measuring trends and making initial quantitative generalizations about policy in the trade and environment field. This general review and categorization is a necessary step in the development of any field of study and absolutely critical to building a basis for cumulative research and advancement of knowledge. The findings suggest that the data mirror general beliefs about trade and environment with respect to the types of problems, actors involved, remedies, industries and other key attributes. Notably, the findings highlight the difference between process and product in environmental cases and the relation between rich and poor countries in trade and environment issues. Keywords: Trade; Environment; Data; Law; Endangered species; Methodology

1. Analyzing issues in trade and environment Most studies about trade and environment examine the field primarily from a single viewpoint. For instance, economists solely focus on economic issues, lawyers on legal issues and environmentalists on environmental issues. Problems of trade and environment are, by its name alone, intrinsically multidimensional in nature. Together, the two areas form the basis for defining the foundation for trade and environment discourse, but they may, and often do, include other types of critical disciplinary elements.

* Tel.: (1-202) 885-1691; Fax: (1-202) 885-2494; e-mail: [email protected]

One problem complicating trade and environment analyses is that the types of measures and indicators invariably differ. All of these types need to be addressed in order to relate a complete story. Therefore, the logical choice for a unit of analysis is the case study. The case study represents a commonly shared perspective in which several definable indicators can be incorporated into a cohesive and coherent framework. A collection of case studies ordered in a categorical fashion may be the foundation for an inventory of cases in trade and environment that can be generally and thoroughly examined. This inventory can serve as a common foundation from which field professionals can perform and build on existing research. Herein lies a critical step in the advancement of this field: the ability to carry out a variety of analysis based on a common source.

0921-8009/96/$15.00 Copyright © 1996 Elsevier Science B.V. All rights reserved. PII S 0 9 2 1 - 8 0 0 9 ( 9 6 ) 0 0 0 6 8 - 7

20

J.R. Lee / Ecological Economics 19 (1996) 19-33

This paper will use the Trade Environment Database (TED) as a basis for this inventory and it will report on some initial analyses of trade and environment indicators. The TED provides comparable trade and environment case studies at a site on the World Wide Web. TED is a framework and a set of trade and environment case studies that are organized by clusters and categorized by defining attributes. There are four principal comparative clusters in TED: law, geography, trade and environment. The focus in this paper is on the latter two clusters. Each case study includes textual descriptions, coded information, pertinent supporting data and hyperlinks to other TED cases or other relevant Internet sites. Due to space limitations, TED is only briefly explained here. Table 1 gives the identifier names and brief descriptions of the 79 TED cases used in this analysis. In the text, a capitalized name indicates a reference to a case found in Table 1. Table 2 shows the 28 categories for reporting that comprise the case studies. However, only some of these 28 categories are used here, particularly those attributes that are critical to trade and environment, along with some legal and geographic attributes. Further description of the general methodology and all the cases in TED are available elsewhere. 1 There is a major caveat to consider in interpreting the results. The case aggregates do not claim any empirical or statistical properties, although they are quantitative in nature. The cases were not randomly selected and no generalized sampling effort was undertaken. The cases are largely drawn from the developed countries and often chosen by default due to a lack of suitable information of cases in less developed countries. Although the data do not have statistical properties, this does not mean that they are incapable of having them. There are statistical techniques which can be used to proximate samples from case study results. This is a completely separate effort from the task in this paper.

J See the TED Home page at the following address: http://gurukul.ucc.american.edu/ted/ted.htm. Under it, refer to "About the TED Project." See also Lee (1994, 1995).

2. What the numbers say Numerical attributes assessed here fall into the legal, geography, trade and environment clusters. In each cluster section, there will be a description of the data and a discussion of the data implications. Only some of the 28 categories in TED are utilized for this paper. The data are represented in frequency counts in the context of discussing key policy issues. The legal cluster demonstrates several attributes related to relevant case law, including the discourse (agreement or disagreement), the scope (a dimension spanning from unilateral to multilateral involvement), the forum for the case and the number of actors which may be affected by the case. The geography cluster compares the continental domain of the species or habitat in question, the regional site of the trade and environment conflict and the country where a regulation does or might have impact. The trade cluster shows the applicable legal measure, the trade product and the industry to which the trade product belongs. The environment cluster displays the type of environmental problem, the habitat~species at issue and the kind of solution germane to the problem. The names that appear in capital letters are reserved key words in the TED construct. Depending on the context, they will refer to a case identifier mnemonic (referenced in Table 1 with a brief description) or an attribute of a category applicable to a case. The TED categories are underlined.

2.1. LEGAL cluster There are four attributes in the LEGAL filter: discourse, stage, scope and the number of actors involved in the issue.

2.1.1. Discourse Discourse describes the approaches actors take to the case, whether it is a convergence of views (agreements) or a divergence (disagreements). A convergence suggests treaties or agreements to them, such as the CITES decision to add the Siberian tiger

J.R. Lee / Ecological Economics 19 (1996) 19-33 Table 1 (continued)

Table 1 TED cases and identifiers Number I 2 3 4 5

6 7 8 9 I0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

21

Identifier

Description

AFRICA AUSTRIA BARREL BASEL BEAR BEETLE BENGALI BIRDS BLACKSEA BOTSWANA BRAZIL BUTTER CANCOD CHILE CIGAR COCA COLORADO CORAL CITES DANISH DUTCHWD ECCAR ECFURBAN ECPACK ECUADOR EGYPT ELEPHANT FRANCE GERMAUTO GERMPACK GREEN GROUSE HAWKSBIL HOOF HUNGARY INDONES ISRAEL ITALYBAG JAPAN JELLYWAX JWHALE KHAIN LAPAZ LOBSTER MALAY MANGROVE MEDIT MERCK MONTREAL NAFrA NEMATODE NICARAG NIGERIA

Africa forest loss Austria trop wood ban Turkey hazmat trade Basel agreement bear protection beetle trade Bangladesh-US waste Lat American bird export Black Sea pollute Botswana cattle farm Brazil log export ban Monarch butterfly Canada cod case Chile timber farms cigarette ban/Thai coca production Colorado River dispute watch on coral Danish beer bottle Dutch trop wood import EC vehicle emissions EC fur import ban EC package law Ecuador oil export Egypt tourism problems elephant and ivory French Alp ski ban German auto recycling German package law green turtle loss/Qatar grouse imports/Dutch Hawksbill turtle EC hoof/mouth ban Hungary-Slovak dam Indonesia ban on wood Israel Jordan H20 Italy plastic bag Japan plutonium jellywax hazmat IWC Japan dispute Khain Sea waste Lapaz agreement US-Canada lobster feud Malay log export mangrove protection medit tourism Merck lnbio agreement Montreal protocol NAFTA treaty nematode/pine trade Nic.-Taiwan lumber Nigeria waste imports

Number

Identifier

Description

53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79

NWHALE ONTARIO OPTION9 PANDA PFBELIZE RHINO SALMON SANDIEGO SHARK SHRIMP SIBERIA SOMALIA SULFER SWIFT TAIGA THAIBIRD THAILOG TIGER TIMOWL TUNA TURKEY UKCOD USCANADA USCARTAX USCHINA USWOOD VENICE

Norway IWC dispute Ontario beer cans option 9/US forest US-China panda trade Belize wood/tourism rhino horn trade ban salmon and herring San Diego Tijuana prob shark and soup shrimp and turtle Siberia/Hyundai wood Somalia waste imports sulfur pollution/EC swift and soup Russia forest policy cites ban on Thailand Thai logging ban Siberia tiger loss timber and owl GATT tuna dolphin Germany/Turk hazmat UK-Spain cod US-Canada timber US auto taxes US-China cites/tiger US wood subsidies Venice Expo 2000

to its ' A p p e n d i x I' list o f p r o t e c t e d species ( T I G E R case). D i v e r g e n c e s are, o f course, j u s t the o p p o s i t e a n d i n v o l v e c a s e s w h e r e parties are d i v i d e d w i t h r e g a r d to a g r e e m e n t s or the r e g u l a t i o n o f t h e m . F o r e x a m p l e , the U n i t e d States a n d M e x i c o d i f f e r e d o n U S t u n a i m p o r t r e g u l a t i o n s i n t e n d e d to p r o t e c t dolp h i n s ( T U N A ) . In the 79 T E D c a s e s d i s c u s s e d h e r e t h e r e w e r e 24 i n s t a n c e s o f a g r e e m e n t a n d 55 o f d i s a g r e e m e n t (see T a b l e 3). T h e d i s t i n c t i o n in this c a t e g o r y reflects t h e n u m b e r o f c a s e s t h a t are settled v i a n e g o t i a t i o n v e r s u s t h o s e in d i s p u t e in s o m e legal p r o c e e d i n g . T h e distribution suggests a somewhat weighted focus on cases with divergent interests (disagreements). Convergent i n t e r e s t s o c c u r less t h a n o n e - t h i r d o f the time. It is p r o b a b l y n o t s u r p r i s i n g t h a t t h e r e are m o r e d i s a g r e e m e n t s c o m p a r e d to a g r e e m e n t s . O n e r e a s o n is that, g i v e n the r e l a t i v e l y u n d e r - d e v e l o p e d state o f e n v i r o n m e n t a l law, t h e r e are s i m p l y m o r e issues t h a n t h e r e are i n s t i t u t i o n a l f o r a that c a n r e s o l v e t h e m .

22

J.R. Lee/Ecological Economics 19 (1996) 19-33

Table 2 The TED categories I. 1. 2. 3. 4.

identification the issue description related cases author

II. 5. 6. 7. 8.

legal cluster discourse and status forum and scope decision breadth legal standing

III. 9. 10. 1l.

geographic cluster geographic locations sub-national factors type of habitat

IV. 12. 13. 14. 15. 16. 17. 18. 19.

trade cluster type of measure direct versus indirect impacts relation of trade measure to resource impact trade product identification economic data impact of trade restriction industry sector exporters and importers

V. 20. 21. 22. 23. 24.

environment cluster environmental problem type number of species resource impact urgency of problem substitutes

VI. 25. 26. 27. 28.

other factors culture trans-boundary issues human rights relevant literature

Although more such institutional fora are coming into existence, the issues they seek to resolve are arising at an even higher rate. The finding may as well mean that issues of trade and environment are so contentious that reaching agreement is difficult. One may, as well, envision the distinction between resolution and dissolution

Table 3 Case discourse Agree 24

Disagree 55

along a time line, as disagreements eventually are replaced by agreements after some lag time. Thus, part of the conceptualization o f issues here may be assuming them to be part of a temporal process. On the other hand, simple frequency counts of this nature can be misleading. The difference between the number of cases in agreement and disagreement may be due to the fact that the breadth of decisions in agreements and in disagreement widely differ. Agreements are often very broad tracts that apply to a variety of situations and legal acts (such as the North American Free Trade Agreement or N A F T A ) . Disagreements, on the other hand, are often specific to a single law which may be part of an agreement (such as the T U N A case). Agreements also cover other issues such as related legislation or laws and enforcement or regulation of agreement. One can regard these case issues, especially those emerging most recently, as 'canaries in a cage.' The cases may illustrate areas where an environmental problem (or an interest in environmental issue area) is rapidly growing or changing in some way. This indicates that the stage, discussed later, provides important clues to future behavior and areas which may require future focus in cases of trade and environment. What kinds of legal measures show up in discourse? Of the 24 agreements, 15 are regulatory standards, meaning that these measures do not directly impact trade flows. Despite this concentration on regulation, the actual products, problems and fora are very disperse and diverse. Very few agreements are specific to a species threatened by trade and many address habitat or source-related problems. However, there are an increasing number of pollution and other disposal or sink-related problems. The disagreements are likely to focus on trade disputes, or at-the-border issues (19 of the 55 instances o f disagreement). This indicates an apparent contradiction between efforts to protect the environment and at the same time maintain market discipline. W o o d is the most frequent trade product and industry (13 or the 55 cases) in disagreements, followed by waste (5 cases). Species are much more likely to be an issue in disagreements than agreements and often one country attempts to change behavior in an extra-territorial manner, such as the U S C H I N A case (US sanctions on Taiwan for CITES

J.R. Lee~Ecological Economics 19 (1996) 19-33

increase in the sheer number of cases included. One would expect the completed proportion to rise with time. About 40% of the cases are in-progress and another 15% are allegations. Part of this distribution no doubt results from the TED construct itself - - in cases where allegations are made there is little information available and no formal documents to refer to as a point for analysis and categorization. One might suspect that there is a huge back-log of allegations which at some point may be legal cases. What is evident is that, in sum, there are more unresolved trade and environment cases than there are resolved cases. It also indicates that the many coming cases will be influenced to some extent, legally and politically, by the precedent base of completed cases. Thus, the completed cases represent a 'tree' on which a more comprehensive future system will be built. For example, the Trail Smelter case of the 1930s between the United States and Canada, over contamination from a Canadian copper and zinc smelter polluting the United States, largely set the basis for later interpretation of trans-boundary environmental law.

Table 4 C a s e stage A l l e g a t i o n 11

In p r o g r e s s 30

23

C o m p l e t e d 38

violations) or the BEAR case (US laws to prevent poaching of North American bears for sale of parts in Asian markets).

2.1.2. Stage The stage criterium provides a tracking element for the data and is a basis for evaluating cases on a historical dimension. Cases are coded as allegations, in progress and completed cases. A case may actually evolve under this type of framework, representing an issues tracking system. Slightly less than one-half of all the cases are complete (see Table 4). One would expect more completions than other categories of stage merely as an artifact of historical record. The completeness ratio may represent the pace at which the body of cases is changing and therefore the degree of change in the trade and environment area. It also obviously reflects the development of the TED effort and an

25 I .....

,

_

ts

--

1

20 - -

10

-

-

o --

(22)

(8)

EtmoP~

(4)

~

(9)

ArRXCA

(S)

(4)

(5)

(4) S AMERIC (4)

BRAZIL SOMAL 11 USA i01 ERA2 SOTS 11 NAFTA 51 ECUADOR ECUR NGRIA 11 CANADA 11 CHILE CHI~ EANGLA 11 OAU 1 l N I C A R A 1 | AND~ ANDEkH

EURCOM i0 JAPAN RUSSIA 3 I INDON GERMANY 21 THAI

2 2 2

ITALY Fr~a~cE NETHER

l~-----~

2

(19)

11 ~ u ~ Y

1~ HUNGARy 1 UKRAINE 11 AUSTRIA 11

HEL~Zm l p -

< .... AXIS (5) 1 1 1 1I

TURKEY ISRAEL EGYPT LEBAH

-

2I 1I 1 1I

0 -~,

I s

~ I . . . . I Frequency Counts

"1 10 - -

Global

(16)

- CITES

(8),

GATT

(6),

AND

IWC

(2)

Fig. h F o r a counts: c u m u l a t i v e and f r e q u e n c y .

J.R. Lee / Ecological Economics 19 (1996) 19-33

24

To understand the temporal aspect of trade and environment issues, it is probably more important to look at the kinds of cases within each of the three categories. Policy makers would probably look more closely at what is in progress in order to affect the decisions that are being made. Researchers, on the other hand, may want to focus on allegations for insight into the seminal aspects of a case to understand upcoming areas of interest. Lawyers, seeking to understand legal precedent, may want to focus more on those cases which have been completed.

2.1.3. Fora The most frequent fora for trade and environment issues are multilateral institutions. The European Community or European Union ( E C / E U ) is represented most often (10 of the 33 cases, not including member state actions), followed by the Convention on the International Trade in Endangered Species or CITES (9), the United States (8) and the G A T T / W T O (6). The highest frequencies suggest an issue focus on developed countries, despite the fact that the most pressing problems may in fact occur in developing countries (see Table 5). This suggests that problems are being solved not necessarily because they are the most significant, but rather because legal institutions exist in some places to deal with some problems and are absent in others. Fig. 1 is a two-dimensional breakout of fora based on cases distributed by general continental boundaries. Global cases have been excluded. This depiction illustrates the difference between cumulative and frequency counts in examining countries involved in the cases. Looking up from the axis, the largest cumulative counts were for Europe (22) and North America (19). However, looking down from the axis, the frequency counts by the number of differing continental actors clearly differs across countries. Viewing the topic of the axis, North America is relatively smaller in comparison, Africa Table 5 Leading fora and cases Eur Community CITES USA GATT

10 9 8 6

Table 6 Size analysis Size

Scope Num Rich-and-rich Rich-and-poor Poor-and-poor

1 2 3-50 51-up

unilat bilat region global

Total

15 15 34 15

3 3 19 3

6 10 11 12

6 2 4 0

79

28

39

12

'Rich' is defined as OECD membership.

relatively larger on this basis. The greater the number of actors involved may in fact make environmental protection less likely.

2.1.4. Number of actors affected In each case, the actors may produce a direct or indirect impact. For example, the TUNA case might have affected the status of trade for all 100-plus GATT members. Likewise, the Italian Plastic Bag Disposal Law (ITALYBAG case) became internationalized when other EC members complained that the ruling was counter to general EC policy and therefore discriminatory. The number of actors affected (size) corresponds to another category called scope, which is an increasing ordinal dimension: unilateral, bilateral, regional and global. In Table 6, the number of actors affected is organized according to the four scope categories. Size was further cross-compared with the relative economic standing of the actor, whether they are developed (rich) or less-developed (poor) countries. The basis for this distinction is membership in the Organization for Economic Cooperation and Development (OECD). REGION occurs most frequently, in 34 of the 79 cases, or about 40% of the total. Unilateral, bilateral and global all appear 15 times (not by design). This suggests that the majority of efforts are not directed at local or worldwide problems, but rather focus on a certain bio-geographic area that lies somewhere in between. The breakout of cases suggests the difficulty in crafting world-scale environmental policies that cover a variety of habitats and need to integrate these policies with actions at local or national levels. When the sizes are analyzed by type of country involved in the decision, it becomes clear that biogeography is a necessary but not a sole determinant

J.R. Lee / Ecological Economics 19 (1996) 19-33

of environmental policy cohesion. Level of economic development appears to have a critical effect. When analyzed by size, Table 6 shows: • where rich countries are involved, • where rich and poor countries are involved and • where poor countries are involved. Nearly 50% of the cases involve both rich and poor countries. About 35% of the cases involve rich countries only and about 15% involve poor countries only. This finding not only indicates the need to include poor countries in crafting environmental solutions, but also underlies the problems in creating a database such as TED that relies on information from developed country sources. About 15% of the cases involve only poor countries. This constitutes a relatively unexplored research and policy area. The focus on rich countries shows clearly in the geography of the cases, where they often impose legal structures onto poorer countries (as is evident in differences between where the problem is and where the impact is). Perhaps higher incomes are necessary for agreement on trade and the environment if only to level the discussion of the issues. Sometimes this imposition has been with good environmental intent, but it is invariably a mixture of many policy goals. A breakout of the largest group, the region, by the number of actors shows a range of low, middle and high. About two-thirds of these cases involve between 6 and 20 actors and this is, of course, due to the inclusion of the E C / E U . Nearly one-half of the group are cases between developed countries. Perhaps this indicates system factors more than issue compatibility and the existence of institutions that can handle such issues (see Table 7). Herein lies a valuable clue about an area of needed research: how do multilateral impacts be-

Table 7 Regional size analysis Size

Scope Num Rich-and-rich Rich-and-poor Poor-and-poor

3 - 5 region 9 6 - 2 0 region 22 21-50 region 3

2 15 2

5 5 1

2 2 0

Total

19

11

4

34

'Rich' is defined as OECD membership.

25

tween rich countries impact poor ones in the aggregate? A significant number of decisions made by these regional regimes have a significant impact on poor countries. Most of these cases are related to the EU or NAFTA, with Mexico receiving the bulk of rich-poor impacts. This points to one unique aspect of NAFTA, in joining rich and poor countries, which the EU does not do. At one level, the LEGAL cases confirm common sense about trade and environment issues. There is little precedent and comprehensiveness to current laws, more disagreement than agreement and issues are largely limited to the developed countries. Some cases do, however, overlap (ECFURBAN and BEAR cases or TURTLE and HAWKSBIL cases), creating a confusing tableau of discipline. On another level, the information permits a more detailed description of why these common sense attitudes prevail. Most cases are islands that have little or no relation to other decisions in a legal sense, nor do they necessarily relate one environmental problem to another in a biological sense. From the data, one has the feeling that the system is chaotically scrambling to keep up with the many new problems that arise.

2.2. GEOGRAPHY cluster The geographic attributes of the cases probably reveal less in the overall totals than in the differences between the totals. The cases are compared on the basis of the continent, region and country impacted in the case. The continental domain in a case refers to a large-scale habitat, a continent, in which many species reside. Some leading domain case areas represent well-known problems: deforestation in South America and Southeast Asia, pollution problems in over-crowded Europe and global problems such as ozone depletion. Continents are used to define a domain. North America and Europe are domains 14 times, seas and oceans 14 times, Asia 10 times, Africa 9 times and South America twice. Whereas the domain is most likely to be a continent (such as North America or Europe), the regional site is more likely to be a region of that continent. This is usually a continental breakdown into compo-

ZR. Lee~Ecological Economics 19 (1996) 19-33

26 Table 8 Case geography Region/geog

Domain

Site

Impact

Global Europe Asia/Australia Africa North America South America Mideast Atlantic Ocean Indian Ocean Pacific Ocean Other seas

9 14 10 9 14 5 3 6 2 2 4

9 16 12 7 18 5 4 4 2 2 4

11 22 12 6 19 4 5 0 0 0 0

Total

79

79

79

nent parts based on compass points (such as Western North America or Eastern Europe) and unique habitats (the Amazon). T h e i m p a c t - - the location of a law that regulates some activity - - identifies where a law is enacted which applies to the region and the domain. Again, there is some divergence between the impact and that of the other two geographical attributes. Obviously, all of the sea and ocean impacts are based on laws that have effect on country territories. In terms of impact, Europe accounts for 22 cases, North America 19 and Asia 12. South America (4) and

Africa (6) are rarely the sites of the problem impact, but are often the site of the domain problem. The Mideast has 3 cases in domain, 4 in site and 5 in impact (see Table 8). In this regard, its profile is more like a developed than a developing country. The total cases of impact in a given geographic area should equal the total domain cases in the same geographic area, but this is not always true. Both North America and Asia show higher totals for country impact than continental domain. This discrepancy results largely because demand for some processed good is the cause of a resource loss in other parts of the world. For example, part of the endangerment of the African elephant is attributable to demands in East Asia for ground and carved ivory (ELEPHANT case). Therefore, East Asia is the place for impact, although it is not the domain of the African elephant. Both Europe and North America are the continental domains in 14 cases and are the continents listed for impact in many more cases. Europe is the country of impact in 22 cases and North America 19. In part, this is the result of the 10 ocean cases (and 4 seas), which naturally have no territorial point of advocacy. The Atlantic Ocean accounts for 60% of those cases. Trade and environment issues mirror perceptions of where problems exist, and as reflected in the

i Fig. 2. Perceptions of trade and the environment: geographic locations of impact sites (size of continent is proportional to number of cases).

J.R. Lee/Ecological Economics 19 (1996) 19-33

cases, have a decidedly developed-country focus. In Fig. 2 the areas of impact are described once again, but from a different perspective. Here, the map of the world is re-sized according to the number of cases in impact locations. From this vantage point, the relative imbalance in issues over global trade and environment problems, between rich and poor, is a kind of environmental myopia. Europe and North America loom as giants while South America and Africa are mere midgets. Yet, over the last decade Europe and North America have actually been reforesting large parts of their continent, while the forests of Africa and South America are among the ones quickly disappearing. 2.3. TRADE cluster

The TRADE cluster is comprised of the measure in the case (trade or regulatory), the product at issue and the industrial category to which that product belongs. 2.3.1. Measures Measures fall into two general categories, de-

pending whether its relation to trade is direct or indirect. Direct measures are those that impact on trade flows at the point of entry or departure from a country (so-called 'at-the-border' measures) and are related to issues of market access. These would include import and export bans, tariffs and quotas. Retaliatory measures are also included. Indirect measures occur 'inside-the-border' and generally involve issues of market regulation. One of the most common is the regulatory standard. Italy required that only certain types of bagging material be used at landfill sites (ITALYBAG case) and the Danes required that only returnable beer bottles be sold in order to lessen demand for landfills (DANISH case). The Danish measure was equally applied to all products, whether foreign or domestic in origin, but it was argued that they impacted imports unevenly because Danish bottlers had already adopted a beer bottle recycling system before the regulation. While standards may be viewed as a 'stick' with which to punish certain types of behavior, a subsidy signifies where intervention is actually promoting certain types of activities with a 'carrot.' Subsidies have often been called 'offensive protection.' For

27

example, both conservative and liberal groups in the United States have criticized the various below-cost timber sale programs operated by the US Government as wasteful and ineffective (USWOOD case). Roughly two-thirds of the cases involve instances where the measure in the case is actually a domestic law rather than a trade law. This is important perhaps because of the venue for dispute resolution. The cases of indirect measures often are taken by a national body of power while a direct measure is more likely to be national or international in nature. The indirect cases indicate areas that may be largely outside of multilateral disciplines or likely to involve dispute because they are outside of them. In itself, the tension between the state and a multilateral treaty is a matter of policy concern. This is especially true when state and sub-state laws differ, as in the ONTARIO case. Of the direct cases, there were far more import bans (20), although instances of export bans (4), retaliation (3), quotas (2) and import taxes or tariffs (2) also appeared. One reason for the import ban preference is that, administratively, it is a lot simpler than taxing and regulating an activity. Import bans are frequently in line with the domestic business interests and therefore the trade measure is often also expedient as a domestic economic measure. This was true in the tuna-dolphin case (TUNA case), where the US tuna industry had suffered the strictures of the Marine Mammal Protection Act and thought it unfair that their competitors (Mexico, among others) did not. Likewise, the small number of Danish beer brewers were supporters of the bottle recycling laws because they already had informal domestic requirements. German brewers adamantly opposed the new laws, lost the case and then pressed the German government for stronger recycling laws to allegedly keep out American beer brewers. Canada kept out American beer imports to encourage recycling, an act further complicated because it was enacted by the Province of Ontario (ONTARIO case) and not the Government of Canada. This latter case is one of several which points to jurisdictional issues which confront multilateral agreements signed by countries. Of the 47 indirect cases, most relate to standards, with about one-half regulatory bans (21) and regulatory standards (19). Subsidy also appears in 7 cases (see Fig. 3). Indirect and subsidy cases together

J.R. Lee~Ecological Economics 19 (1996) 19-33

28

account for about two-thirds of cases, suggesting that reliance on pure trade impacts is unlikely to solve most environmental problems. Many have domestic components as well.

2.3.2. Trade products To investigate the issues related to trade product, it is difficult to make aggregates which are comparable simply because of differences in trade data reporting. For instance, information about wood products differs by aggregation levels. In the Indonesia pencil case (INDONES case), the type of wood was specifically identified as a particular tropical hardwood (Jelutong) where raw product was banned for export. Jelutong is particularly prized in making pencils. However, in the Dutch wood case (DUTCHWD case) the ban was on the import of all tropical hardwoods. Wood shows up 18 times and is by far the one product that dominates the group of products traded in the cases. The enormous amount of trade in wood and wood-based products is, no doubt, one reason why so many cases show up that are related to deforestation. Global exports of wood and wood products exceeded $100 billion in 1988. In equatorial Guinea, wood exports were almost 60% of the country's total exports and in Burma almost 41%. Industrial countries also rely on wood exports: Finland (44.4%), Sweden (21.2%) and Canada (16.7%), for example (Lee, 1991). Meat products show up in nine cases and are often related to a species loss, while waste appears the same number of times. Meat, however, often reflects national dietary compositions while waste reflects industrialization. Tourism, a service industry, shows up 6 times. A service industry directly has minimal impact on the environment, but the goods and related services associated with the service have Measure REGSTD 21 R E G B A N 19 SUBSIDY 7

Direct/Indlrect l > INDIRECT 47

Cases

I -->

IMBAN EXBAN RETAL QUOTA IMTAX

19 4 3 2 2

> DIRECT

30

I

BOTH

2

Fig. 3. Trade measures.

I

T O T A L 79

I I

Table 9 Trade products Product

Number

Product

Number

Wood Meat Waste Tourism Pharmaceutical Fish Many

18 9 9 6 4 4 3

Plast Crafts/Arts Pet Car Beer Other Total

3 3 3 3 2 15 79

a significantly larger one. The tourist buses whose pollution is damaging Egypt's pyramids (EGYPT case) is clearly a material manifestation of this supposedly 'invisible' industry. So was the Pink Floyd concert in Venice (VENICE case) which caused extensive environmental damage to the city. Several products show up a number of times, including trade in pets, beer, pharmaceuticals, arts and crafts and plastics (see Table 9). These end-use products suggest that everyday life has an enormous impact on the environment, represented in the products that people use on a daily basis.

2.3.3. Industry type The industry type in the case is based on the industrial group that the trade product belongs to, based roughly on the Standard Industrial Code (SIC). In many instances there is considerable overlap between the two, largely due to problems with aggregate specification of trade reporting categories. The 79 cases are grouped by industry according to the SIC industries, broken down into four basic groups: mining and extractive (6); agriculture, fishing and forestry (35); manufacturing (26); and services (7). Nearly all of the agricultural cases involve food (16) and wood (18). Utilities, included under mining and extractive industries, show up in a number of cases related to water, such as the proposed dam on the Danube and the controversy involving Hungary, Slovakia and the Czech Republic (HUNGARY case). Tourism accounts for all the services cases and manufacturing is by far the most diverse of the industries in terms of representation (see Fig. 4). Table l0 shows a comparison of the types of environmental problems and the types of industries involved in each case. In the table, input products include raw materials and semi-manufactures. Output

J.R. Lee~Ecological Economics 19 (1996) 19-33 products include final demand items. Input products are usually associated with species and habitat problems, while output (final demand) products are usually associated with pollution and waste problems (because of differences in processing stages). Differing problems may require differing solutions and policy-making should orient solutions to optimize impacts across cases. Far more cases involve impacts on the environment from inputs than from outputs (58 of the 79), with 26 of those species-related and 32 habitat-related (illustrating product versus process issues). In the 21 output problems, 5 are associated with pollution and 16 with waste. Given this type of focus, analysis of tariff structures might reveal preferences which probably encourage exploitative habitat and species use. Many developed countries have relatively low import tariffs on raw materials and higher tariffs on manufactured ones. Focusing on actual site damage as the motivating force for the case may miss the many impacts of intermediate product trade. Generally, raw or semiprocessed product problems result from source-based resource extraction (drilling for oil or harvesting of trees) that are localized to the habitat itself. On the other hand, environmental problems related to manufactured product residuals are much more diffuse (they may not have a geographic, but an economic

FOOD18~E~ Fig. 4. Cases in an industrial tree.

29

Table 10 Input and output products in the cases Input products Species Birds Marine animals Land animals Habitat Coral Wood Water General

58 26 6 11 9 32 1 18 7 6

Output products Pollution Chemicals Petroleum Waste Cans, bottles Containers CFCs/halons Plutonium Mfr by-product

21 5 3 2 16 2 3 I 1 9

Total

79

distribution) and are often problems of sink-based pollution. Another environmental difference is due to the distribution of consumers. Few consumers buy raw or semi-processed goods - - companies do. Most processed goods - - manufactures - - are bought by consumers. Generally, the product's consumers are less concentrated than the company, and therefore so too are the impacts. The impacts often contribute to a wider environmental problem encountered in habitats. But even these impacts can differ. Waste from a factory (specific and local) and from a community (general and disperse) clearly differ. Given that roughly one-half of world trade is in semi-processed products, this indicates a different kind of problem which needs to be addressed in trade and environmental fora. 2.4. E N V I R O N M E N T filter Environmental problems fall into a number of general groupings. Some involve problems of species loss or pollution, which can be further sub-divided by whether the impact is in the air, land, on sea. The problems include large-scale impacts such as deforestation and habitat loss.

J.R. Lee/Ecological Economics 19 (1996) 19-33

30 Table 11 Environmental problem type Habitat loss Species loss Pollution

Table 13 Wood type clusters 26 22 21

Most environmental problems in the cases are issues related to: deforestation (17), species loss among ocean animals (11), land pollution (10), species loss among land animals (9) and sea pollution (8). Second-tier problems include species loss among air animals (6), water resource and general habitat losses (5), air pollution (3) and human health problems (2). The top three problems indicate the general approach taken to differing kinds of problems. On land, the environmental focus is on the habitat while in the oceans the focus is on a particular species, with the exception of coral (see Table 11). Coral is treated as a habitat. By problem type, habitat, including water and forest loss, shows up most frequently (27), followed by species loss (26) and pollution (21). This distribution shows a fairly wide and evenly-distributed problem focus. It also suggests that problems of process cannot continue to be ignored in multilateral trade fora. Table 12 illustrates that the use of substitutes or like products (21) appear as the most common solutions, followed by recycling practices (20). Further down the list, the switch to synthetics (11) and bio-degradable products (10) show up frequently, as do conservation measures (10) and eco-tourism (5). Table 12 Environmental problems and solutions Problem

Number

Solution

Number

Deforestation Species loss sea Pollution land Species loss land Pollution sea Species loss air Water loss Habitat loss Pollution air Health Many Total

17 11 10 9 8 6 5 5 3 2 2 79

Like products Recycling Synthetics Biodegradable Conservation Eco-tourism

21 20 11 10 10 5

Many Total

2 79

Tropical forests

Temperate forests

Hardwoods

5. Thai log ban 17. Brazil export ban 19. Indo. export ban 28. Belize forest plan 37. Dutch trop. ban 43. Austria trop. ban 47. Malay export ban 55. Nic.-Taiwan wood 75. Africa wood loss

4. US wood subsidy 20. US old growth ban 76. US forest plan

Softwoods

63. mangrove protect

3. Canada subsidy 18. Chile subsidy 33. Russia wood reg. 53. pine nematodes 70. Taiga protect

The cases relating to wood recycling can be grouped into a simple two-by-two matrix which differentiates, on one axis, between tropical and temperate climates, and on the other, between hardwoods and softwoods. A general presumption is that the majority of forest problems are related to harvesting of tropical hardwoods (see Table 13). The table shows that this is not always the case. Of the 19 wood-related cases, nine concern tropical hardwoods. However, six cases are temperate softwoods and another three temperate hardwoods. One case, concerning mangrove protection, relates to tropical softwoods. In sum, tropical cases show up 10 times, temperate cases 9. Hardwoods total 12 cases and softwoods 7 (see Table 14). Deforestation is a problem that cuts across countries and environments. Trade measures can be matched with environmental problems, with the latter broken down between types of input (species and habitat loss) and output (pollution and waste) problems. It is clear that certain measures appear to be used in conjunction with certain types of environmental problems. Regulatory Table 14 Wood and climate breakouts

Hardwood Softwood Totals

Tropical

Temperate

Totals

9 3 12

1 6 7

10 9 19

Retaliation

Quota

Export ban

Import ban

TUNA, GROUSE, ECFURBAN, SHRIMP, BIRDS, LOBSTER, CIGAR TIMOWL, ELEPHANT, RHINO SALMON, CANCOD, UKCOD HAWKSBIL, USCHINA, JWHALE

SHARK

Regul. std.

Subsidy

BEAR, NWHALE, TIGER, SWIFT, THAIBIRD, BU'ITER, HOOF, GREEN, BEETLE

species loss

Input problem

Regul. ban

Trade measure

Table 15 Trade measure and environmental problem type

BRAZIL, INDONES

ONTARIO

BARREL

KHAIN, JAPANPL,

GERMPACK, ECPACK, ITALYBAG, DANISH, BASEL, LAPAZ, NIGERIA

VENICE, ECCAR, SULFER, USCARTAX, SANDIEGO, COLORADO, MEDIT

sMONTREAL TURKEY, JELLYWAX, SOMALIA, BENGALI

GERMAUTO

BLACKSEA, EGYPT

SIBERIA, THAILOG, ECUADOR, BELIZE, FRANCE, HUNGARY, MALAY, NICARAG, CORAL, BOTSWANA, TAIGA, AFRICA, COCA ISREALH2

USCANADA, USWOOD, CHILE, MERCK, OPTION9 DUTCHWD, AUSTRIA, NEMATODE

waste

pollution

habitat

Output problem

I

m

k,u

32

J.R. Lee/Ecological Economics 19 (1996) 19-33

bans are used frequently in dealing with species and habitat loss, while regulatory standards are used for problems of pollution and waste. Subsidies are usually associated with habitat loss, often deforestation. Import and export bans, as well as retaliatory measures, are almost exclusively targeted at protecting a particular species (see Table 15).

3. What the numbers mean This paper intends to bring a quantitative dimension to the policy study of trade and environment. The purpose in doing so is to attempt to create a mechanism that can validate, in a somewhat scientific sense, general and quantitative perceptions about attributes and issues in the field of trade and environment. This validation is a critical step in the evolution of any body of knowledge by providing the link between theory and reality. The effort also refocuses the effort from a narrow uni-disciplinary focus to the multi-disciplinary focus captured by case study research. The research has taken a bottom-up approach that attempts to reach the policy level - - the top-down - - in understandable terms. Some work needs to begin from the top-down in order to meet the bottom-up information, which is relatively more abundant, and give rise to better environmental measurements and policies. The basic distributions in the trade and environment issues noted here are not surprising. In the law, more disagreement than agreement exists with respect to a multitude of cases and case types. It is not unusual for richer countries to import environmental resources from poorer countries and it is also likely that they would extend their political-economic power when opportunity arises. Concerning geography, there is a clear indication that issues in developing countries do not receive adequate attention and that richer countries use economic leverage to change the behavior of poor countries. In trade, the chief products causing a problem relate to some of the most basic of human requirements - - wood and food, in particular. In the environment, deforestation and other types of habitat change show up frequently, and so do cases of species loss. Many of the environment changes and losses are attributable to meeting some basic human

needs and to the anthropogenic changes that result from them. The fact that these general trends reflect general non-empirical beliefs about trade and environment is both comforting and disturbing. Any type of data ought to reflect reality in order to generate confidence in the information. However, more work is needed to bring empirical policy study to the point where data may help policy makers better understand the fabric and context of these broad issues. Where do the data and the general understanding depart? Any further work should focus on the number of cases in developing countries, insofar as trade and environment problems are both under-represented in the cases and, unfortunately, over-represented in the degree of actual problems. With this information, it may be possible to better examine trade and environment issues in the context of the relation between 'rich' and 'poor' countries. This is especially required given that some analyses show Africa to be the only area to be a net economic 'loser' under recent multilateral agreements that created the World Trade Organization. If they are a loser concerning the environment as well, then the impacts of such agreements are that much more severe. In the end, the fact that policy-level trends do exist and can be understood both qualitatively and quantitatively indicates a point of departure for connecting empirical and statistical data and relevant policy research in trade and environment. Similar to the development of other bodies of knowledge, issues of trade and environment are evolving into a more mature state of discourse. The step taken here seems no more than a natural part of that process. It needs to be broadened and extended and other tools need development. Steps then ought to be taken to develop propositional inventories, collect syllabi, create appropriate field technologies and the like to step beyond simple inventory-building. The TED project is a first step in that longer journey.

4. For further reading For more information on this subject, the reader is refered to Bilder (1975); Chamovitz (1993); Hufbauer et al. (1986); Office of Technology Assessment (1992) and Stevens (1993).

J.R. Lee/Ecological Economics 19 (1996) 19-33

Acknowledgements S u p p o r t for this p a p e r w a s p r o v i d e d b y t h e E n v i r o n m e n t a l Statistics D i v i s i o n o f t h e U S E n v i r o n m e n tal P r o t e c t i o n A g e n c y ( E P A ) u n d e r C o o p e r a t i v e G r a n t C R 8 2 2 6 3 6 . It b e n e f i t t e d f r o m the a d v i c e o f o n e anonymous reviewer and one named one (Edgar F u r s t o f U n i v e r s i d a d N a c i o n a l de C o s t a Rica). P e a c e B r a n s b e r g e r a n d A n t o n i o S a n t i a g o also p r o v i d e d v a l u a b l e c o m m e n t s a n d editing.

References Bilder, R.B., 1975. International Environmental Disputes. In: Recueil des Cours Academie de Droit International. The Hague, p. 153.

33

Charnovitz, S., 1993. A Taxonomy of International Trade Measures. Georgetown Int. Environ. Law Rev., 6/1: Winter. Hufbauer, G.C., Berliner, D.T. and Elliot, K.A., 1986. Trade Protection in the United States: 31 Case Studies. Institute for International Economics, Washington, DC. Lee, J.R., 1991. Trade in Wood and Wood-Based Products: Trends, Forecasts, Characteristics, and Policies. U.S. Government Printing Office, April. Lee, J.R., 1994. Process and Product: Making the Link Between Trade and the Environment. Int. Environ. Affairs, 6: 320-347. Lee, J.R., 1995. The Trade-Environment Nexus in the Formation of a Northeast Asian Regional Economy. Workshop on Asian Pacific Regional Integration, Graduate School of International Studies, Korea University, Seoul, South Korea, December 12-13. Office of Technology Assessment, 1992. Trade and Environment: Conflicts and Opportunities. Office of Technology Assessment Background Paper. Washington, DC, May. Stevens, C., 1993. The Environmental Effects of Trade. World Econ. 16:439-451.