Term Paper on "International Trade and Environment"

Term Paper 16 pages (4473 words) Sources: 1+

[EXCERPT] . . . .

free trade and whether it is good or bad for the environment. The writer examines the exodus of American companies that are finding it financially advantageous to move their operations overseas. The writer looks at why they are doing it, what the advantages and disadvantages are and how it will ultimately impact the environment. The writer also looks at possible legislation issues that will protect the environment from such actions. There were 20 sources used to complete this paper.

Free Trade and Its Impact on U.S. Overseas Operations and the Environment

An examination of U.S. operations being moved overseas and whether it is because of less stringent environmental regulations and how this will ultimately impact the environment.

Flow of Information

Introduction

Statement of the Problem

Examination of why companies are moving overseas

Putting it all together

Some legislative possibilities to protect the environment

Conclusion

INTRODUCTION

Info: The topic is: Is free trade good or bad to environment? Do environmentalists have a sound argument against free trade? Does free trade cause firms to use dirty technologies overseas? The third question should be the key hypothesis! Need to include actual data about whether stringent environmental regulations force say U.S. firms to migrate to relocate their plant in developing countries with no or weak environmental laws, in order to escape or to reduce the pollution abatement costs. So, what is needed is to include actual data from 1 or 2 developing countries that receive U.S. FDI.

For the past few years the United States has witnessed an exodus of many of its manufacturing companies as they have moved their operations overseas. The companies have discovered that it is much less expensive and cost prohibitive to move the manufacturing to another nation while still doing business as an American company. It has created countless job losses in the United States and has become a problem throughout the manufacturing industry. Companies list many reasons for making the decision to move their operation overseas, including, inexpensive labor, inexpensive materials, inexpensive facilities and inexpensive overhead. Workers in the states are sometimes given the option of following the company overseas, but it is hardly feasible to uproot the entire family and move across the border for a factory job. While the cost of labor and materials are important factors in the decision to move an entire operation overseas, there are other factors that come into play as well. One of those factors is environmental issues. The United States is well-known for its stringent environmental regulations. For the past two or three decades environmentalist watch groups have brought enough pressure on elected officials that legislation has been put in place to protect the environment from the pollution caused by manufacturing efforts of U.S. companies.

There are strict regulations, abatements and punishments for non-compliance throughout the states. Companies lobbied to try and stop or reduce this legislation from occurring but environmentalists were relentless in their quest to protect the natural resources on earth and today, companies no longer have the right to destroy the environment and move on.

The middle 1980's saw a shift in attitude about large manufacturing companies and pollution. By 1984 companies were paying more expenditures for pollution abatement than ever before.

Real expenditures for pollution abatement and control (PAC) increased 4.0% in 1985, about one-half the 1984 rate of increase and the same as the 1983 rate. PAC expenditures had declined in the preceding 3 years. These expenditures are for goods and services that U.S. residents use to produce cleaner air and water and to dispose of solid waste; they consist of expenditures for pollution abatement, regulation and monitoring, and research and development.1 Pollution abatement (PA) directly reduces pollutant emissions by preventing the generation of pollutants, recycling them, or treating them prior to discharge."

The government regulations are designed and in place to protect the environment by monitoring emissions and guiding their allowance with measures in place to clean up the environmental hits that it causes.

Pollution abatement costs can be significant even when faced by a large company. In 1986 alone the abatement costs to United States manufacturing plants totaled more than $40 billion, which reflected an increase of 3.4% over the previous year.

Most of that was due to automobile emission issues, but also included other factors and plants across the nation.

As the decade rolled over and companies were faced with large abatement costs, pollution penalties and other elements of their industry, they began to look for solutions to the problem. One solution of course is to clean up the mess being made by their product manufacturing, and work hard to develop ways to manufacture without hurting the environment, or at least not hurting it as much as had been done in the past. This was a feasible and environmentally friendly solution, but was time consuming and costly to the companies charged with completing it. It was not long before companies turned a watchful eye to areas of the world that were free from the restrictive regulations that they faced in the United States.

For many years there were trade restrictions that prevented companies from just picking up and moving their operations overseas. This in and of itself helped to protect the environment by blocking companies from moving to another nation, setting up shop and destroying the resources there, which ultimately ripple throughout the world and destroy them everywhere.

Then came NAFTA. The North America Free Trade Act, opened the doors for free trade, and was followed by agreements elsewhere as well. Free trade acts on the surface are excellent sources of globalization cooperation.

NAFTA opened the door for United States companies to move their operations to other nations, produce products at extremely low rates of pay and overhead and then ship those goods back to the states for distribution and sale.

An extended NAFTA-like agreement is bound to help larger companies constricted by trade policies designed to protect local businesses. The largest tire and automotive goods, chemical and other supplier concerns already have a presence in Latin America. These businesses serve to local markets, but also - particularly the tire companies - take advantage of lower labor rates to export goods to North America. "

Tax loopholes offer incentives for U.S. businesses to move overseas, Kutsch said, and many businesses are taking advantage of the less stringent environmental regulations and unfair labor practices in other nations.

I don't need my consumer products to be built on the backs of sub-working poor in Third World countries," Kutsch said.

But instead of imposing tariffs on goods from other countries, Kutsch said the United States should refuse to trade with countries that have unsatisfactory regulations. "

Environmentalists around the nation have clamored for the refusal to do business in nations with weak environmental regulations, but the companies moving over there have thus far refused to voluntarily do so.

STATEMENT of the PROBLEM

In 1999 the World Trade Organization faced multiple protests across the nation by environmentalists who believed the organization promoted the ignoring of environmental regulations. Free trade for the most part is a good idea according to experts, but when it comes to environmental issues it opens the door for trouble according to environmentalists who are against free trade without regulations.

A year ago, environmentalists, human rights groups and trade union members were in Seattle denouncing the World Trade Organization. The same groups waged campaigns against NAFTA, the North American Free Trade Agreement, and normalizing trade with China. In all these battles, AFL-CIO president John Sweeney and the Clinton administration have been on opposite sides."

Jarman, Janet. Cleaning up free trade. (analisis sobre las desventajas del Tratado de Libre Comercio)(TA: analysis of the disadvantages of the North American Free Trade Agreement)

In 1993, opponents of the proposed North American Free Trade Agreement (Nafta) felt certain that its implementation would increase pollution and further degrade environmental conditions along the Mexico-United States border. Already, decades of economic integration had caused rapid industrial and subsequent population growth. Former agricultural towns were transformed into industrial centers too quickly for local governments to accommodate growth with adequate infrastructure.

In addition, the number of maquiladoras, or export plants, in Mexico increased from 12 in 1965 to over 2,000 in 1993, contributing to serious air and water pollution on both sides of the border. During the Nafta debate, estimates for cleaning up the region ranged from the $6 billion predicted by the Clinton administration to a $20 billion estimate by the Sierra Club.

Congress appeased the masses by creating an agreement about environmental issues on the side that mandated mechanisms to resolve disputes about possible environmental issues.

Mexico is already feeling the brunt of the free trade act and what it has done to the environment in that area.

Matamoros Mayor Ramon Antonio Sampayo blames free trade for the proliferation of colonias and their strain on his nominal city budget ($16 million). If he had his choice, he would construct a whole new city. "It's cheaper to do that… READ MORE

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