In general, a reduction in trade barriers will affect the environment by expanding the scale of economic activity, by altering the composition of economic activity and by initiating a change in the techniques of production. We present empirical evidence to assess the relative magnitudes of these three effects as they apply to further trade liberalization in Mexico. We first use comparable measures of three air pollutants in a cross-section of urban areas located in 42 countries to study the relationship between air quality and economic growth. We find for two pollutants (sulphur dioxide and 'smoke') that concentrations increase with per capita GDP at low levels of national income, but decrease with GDP growth at higher levels of income. We then study the determinants of the industry pattern of US imports from Mexico and of value added by Mexico's maquiladora sector. We investigate whether the size of pollution abatement costs in US industry influences the pattern of international trade and investment. Finally, we use the results from a computable general equilibrium model to study the likely compositional effect of a North American Free Trade Agreement (NAFTA) on pollution in Mexico.

"Many of the papers included in this volume were first presented and discussed in the Spring of 2000 at a conference on lessons from the NAFTA for the FTAA"--Pref.

'Free Trade and the Environment' examines the impact of international economic integration on the environment, taking as a case study the experience of Mexico, as it transformed itself from one of the most closed economies in the world to one of the mostopen.

Nowhere has the divide between advocates and critics of globalization been more striking than in debates over free trade and the environment. And yet the literature on the subject is high on rhetoric and low on results. This book is the first to systematically investigate the subject using both economic theory and empirical analysis. Brian Copeland and Scott Taylor establish a powerful theoretical framework for examining the impact of international trade on local pollution levels, and use it to offer a uniquely integrated treatment of the links between economic growth, liberalized trade, and the environment. The results will surprise many. The authors set out the two leading theories linking international trade to environmental outcomes, develop the empirical implications, and examine their validity using data on measured sulfur dioxide concentrations from over 100 cities worldwide during the period from 1971 to 1986. The empirical results are provocative. For an average country in the sample, free trade is good for the environment. There is little evidence that developing countries will specialize in pollution-intensive products with further trade. In fact, the results suggest just the opposite: free trade will shift pollution-intensive goods production from poor countries with lax regulation to rich countries with tight regulation, thereby lowering world pollution. The results also suggest that pollution declines amid economic growth fueled by economy-wide technological progress but rises when growth is fueled by capital accumulation alone. Lucidly argued and authoritatively written, this book will provide students and researchers of international trade and environmental economics a more reliable way of thinking about this contentious issue, and the methodological tools with which to do so.

A multi-disciplinary investigation of how economic globalization can help achieve the UN's 2030 Agenda, exploring trade-offs among the Goals.

NAFTA remains a centerpiece of US trade-policy debate, but its provisions have sacrificed environmental concerns for the sake of trade liberalization. This timely volume analyzes the national policies of the United States, Canada, and Mexico. The authors explain how the competing priorities of province, state, or government agendas can slow coordination measures to curtail emissions throughout North America. But, North American cooperation could serve as a model for how developed and developing countries can mutually benefit from an international climate change agreement. Emission reduction is now inextricably linked with trade and finance measures in this post-Kyoto era. The authors argue that the three NAFTA partners can work together to reduce greenhouse gas emissions while mitigating concerns about trade competitiveness. NAFTA and Climate Change provides a critical assessment of how NAFTA initiatives will contribute to the achievement of important climate-change goals at both regional and global levels. This thorough investigation advances potential solutions, and ideas to develop practical channels for transferring technical and financial assistance from developed to developing countries to reduce greenhouse gas emissions and further economic development.