These trends are not isolated; they are fundamentally related. Much environmental damage is due to the increased scale of global economic activity. International trade constitutes a growing portion of that growing scale, making it increasingly important as a driver of environmental change. As economic globalization proceeds and the global nature of many environmental problems becomes more evident, there is bound to be friction between the multilateral systems of law governing both.

This book aims to shed light on the area where these broad trends interact-on the physical, legal and institutional linkages between international trade and the environment. Two fundamental truths about the relationship should become clear in the process:

• The links between trade and the environment are multiple, complex and important.
• Trade liberalization is—of itself—neither necessarily good nor bad for the environment. Its effects on the environment in fact depend on the extent to which environment and trade goals can be made complementary and mutually supportive. A positive outcome requires appropriate supporting economic and environmental policies.

At the most basic level, trade and the environment are related because all economic activity is based on the environment. It is the basis for all basic inputs (metals and minerals, forests and fisheries), and for the energy needed to process them. It also receives the waste products of economic activity. Trade, in turn, is affected by environmental concerns, since exporters must respond to market demands for greener goods. These physical and economic linkages are explored in chapter 4.

At another level, environment and trade represent two distinct bodies of international law. Trade law is embodied in such structures as the World Trade Organization and regional trade agreements. Environmental law is embodied in the various multilateral environmental agreements, the regional agreements and as national and subnational regulations. It is inevitable that these two systems of law should interact. International environmental law increasingly defines how countries will structure their economic activities (parties to the United Nations Framework Convention on Climate Change, for example, have pledged to restructure their economies to cut greenhouse gas emissions), and international trade law increasingly defines how countries should make their domestic laws and policies in areas such as intellectual property rights, investment policy and environmental protection. These legal linkages are explored in chapter 5.

Finally, a host of institutional questions are born of the trade-environment relationship. What institutions might help ensure that trade and environmental policies are mutually supportive? Where and how should disputes be settled? Should there be environmental impact assessment of trade agreements and trade policies? What role should the public have? These questions are examined in chapter 6.

Before delving into the linkages between trade and the environment, we take a basic look at the structure, goals and principles of the international system of environmental management in chapter 2, and the multilateral system of trade rules in chapter 3.

1.3 Differing perspectives