Environmental Issues in International Business

Environmental issues have been engaging increasing discussion in the international business horizon. As in the case of some other social issues in the fore, the environmental issues raised are mostly which disadvantage the developing countries, ignoring or relegating to the background several serious which hold the developed nations or firms from such nations guilty.

Some countries prohibit the import of goods which cause ecological damage. For example, the US has banned the import of shrimp harvested without turtle excluder devise because of its concern for the endangered sea turtles. Countries like India are affected by it.

Developing countries are affected by the relocation of polluting industries from the developed it the developing ones. Similarly, several products which are banned in the developed nations are marketed in the under developed world.

The dumping of nuclear and hazardous wastes in developing countries and the shifting of polluting industries to the developing countries impose heavy social costs on them. The exploitation of the natural resources of the developing countries to satisfy the global demand also often causes ecological problems.

When the multinationals employ in the developing nations polluting technologies which are not allowed in the developed countries or do not care for the ecology as much as they do in the developed nations, it is essentially a question of ethics.

Another serious problem is that developed nations some times raise environmental issues as a trade barrier or a coercive measure rather than for genuine reasons.

The debate has intensified in recent years on the links between trade and the environment, and the role the WTO should play in promoting environmental friendly trade. A central concern of those who have raised the profile of this issue in the WTO is that there are circumstances where trade and the pursuit of trade liberalization may have harmful environmental effects. There main arguments are forwarded as to how this might occur. First, trade can have adverse consequences on the environment when property rights in environmental resources are ill defined or prices do not reflect scarcity This situation results in production or consumption ‘externalities’ and can lead to the abuse of scarce environmental resources and degradation, which is exacerbated through trade. Some of the pollution can be purely local, such as a very noisy factory. Other pollution can have global repercussions, for example, the excessive emission of greenhouse gases, the destruction of rainforests, and so on. Critics argue that trade liberalization which encourage trade in products creating global pollution is undesirable.

The second argument linking trade and the environment is related to the first one. If some countries have low environmental standards, industry is likely to shift production of environment-intensive or highly polluting products so called pollution havens. Trade liberalization can make the shift of ‘smoke stack’ industries across borders to pollution havens even more attractive. If these industries then create pollution with global adverse effects, trade liberalization, indirectly, promote environmental degradation. Worse trade induced competitive pressure may force countries to lower their environmental standards. The argument in other words, is that trade liberalization leads to a race to the bottom in environmental standards.

The third concern about environmental issues is the role of trade relating to more social preferences. Some practices may simply be unacceptable for certain people or societies, so they oppose trade in products which encourage such practice. These can include killing dolphins in the process of catching tuna, using leg hold traps for catching animals for their furs, or the use of polluting production methods which have only local effects.

On the other hand, it has also been pointed out that trade liberalization may improve the quality of the environment rather than promote degradation. First, trade stimulates economic growth and growing prosperity is one of the key factors in societies demand for a cleaner environment. Growth also provides the resources to deal with environmental problems at hand – resource which poor countries often do not have. Second, trade and growth can encourage the development and dissemination of environmental friendly production techniques as the demand for cleaner products grows and trade increases the size of markets. International companies may also contribute to a cleaner environment by using the most modern and environmentally clean technology in all their operations.