Ecological Concern in International Business

Topics: International trade, Free trade, World Trade Organization Pages: 20 (6836 words) Published: December 7, 2010
In this globalization era many industries seek expansion not just limited to their own nation but to go international and seek new market for their products and services. The environmental standards and norms play a significant role in determining the competitiveness of products and goods on the international market. Environmental responsibility is a vital component of a business strategy as it not only helps the environment, but it wins the trust of communities and gains the respect of the governments of the countries in which the business operates. All businesses impact on the environment: they emit pollution, they produce waste and use resources. Businesses, however, are continually being encouraged to improve their approach to environmental issues. To the casual observer, the greening of mainstream business may appear to be a recent phenomenon, but it is no ephemeral fad, according to writer and green business strategist Joel Makower. Rather, he says, it represents a shift in how business is being done, born of a confluence of global challenges: energy and natural resource constraints, global security concerns, growing public health problems, and the specter of disruptive climate change. And opportunities: a wealth of new enabling technologies that allow business efficiency to increase dramatically, dematerializing and detoxifying products and services along the way. The merging of economic and environmental interests may engender one of the biggest business transformations in decades, spurred on by a societal imperative to harness the unparalleled power of the private sector to address the world’s most pressing environmental problems. Companies of all sizes and sectors have come to recognize that being a greener business can create new forms of business value, whether increased sales and reduced costs, or forms of value that are indirect (increased quality, reduced risk, increased ability to attract and retain talent) or intangible (enhanced reputation or becoming a preferred trading partner). Not every company derives such benefits, but many have found ways to turn the emerging environmental ethic into a business opportunity. Enormous economic and population growth worldwide in the second half of the twentieth century drove the impacts that threaten the health and the world — ozone depletion, climate change, depletion and fouling of natural resources, and extensive loss of biodiversity and habitat.  

Environmental Impacts of Trade

World trade expansion has raised the issue of the relationship between trade and the environment. The production of goods that are imported and exported, like other production, will often have environmental effects. According to the free trade principles that provided the basis for GATT and for its successor, the World Trade Organization (WTO), countries cannot restrict imports except in very limited cases such as protection of the health and safety of their own citizens. There have been many international environmental issues, such as forest protection, ozone depletion, hazardous wastes, and global climate change. All these issues are linked to international trade. To address these questions, the theory and practice of international trade need to be examined. Most economists believe that expanded trade is generally beneficial, promoting increased efficiency and greater wealth among trading nations. At the national level, the standard economic policy response to environmental impacts is to implement policies that internalize externalities. At the international level, however, the picture is more confused. The burden of environmental externalities associated with trade may be borne by importers, exporters, or by others not directly involved in the production or consumption of traded goods. The authority to formulate and enforce environmental policies usually exists only at the national level. This can create significant problems when environmental impacts are transnational, since most...
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