Regional Trade and the Environment: European Lessons for North America

While a great deal has been written about both regional economic integration and the trade-environment debate, there has been surprisingly little discussion of the link between the two issues. The purpose of this article is twofold: first, it offers a comparative look at how the world's two most economically significant RIAs deal with circumstances in which environmental policy and trade liberalization interact (and sometimes conflict); and second, it attempts to draw some insight from this comparison as to whether (and why) the particular form of RIA (i.e., a free-trade area such as NAFTA or a common market such as the EC) influences how trade-environment interactions are reconciled. The remainder of this article is divided into four Parts. The first three Parts each deal with one of three key areas in which trade policy and environmental protection policy interact--environmental laws as non-tariff barriers to trade (NTBs), lax environmental standards as indirect subsidies, and the harmonization of environmental standards. The Introduction to each of the next three Parts will outline the potential environmental impacts associated with each of these areas, and how any negative environmental impacts might be nullified. Following this, the regimes of the EC and NAFTA with respect to each area will be detailed and compared. Part V of this article offers some thoughts as to why the EC approach to regional integration will likely be more successful than the NAFTA approach in terms of both negating the adverse environmental impacts of freer trade and improving regional environmental protection efforts in general.