Environnement et commerce international. Le principe de précaution sur la ligne de fracture

“The classical theory of free trade is based on the idea that free trade combined with competition will increase the welfare of all parties in the exchange.” In short, that trade is a positive sum game and therefore any barriers to international trade can only harm overall welfare.
Olivier Godard argues here that this theory breaks down with regard to the environment. It assumes that all the elements in the cost of producing goods -in particular their adverse effects on the environment- are internalized by the producers. But in practice this is not true. Godard offers suggestions of what improvements therefore need to be made.
He starts by examining how to reconcile -by making some corrective adjustments- free trade and protection of the environment, in line with the source of the externalities (consumption patterns or methods of production) and their nature (local or global). But he then argues that the resulting typology is of limited value and cannot cope with the appearance of health and environmental risks that have not been verified scientifically, so that what matters in practice is the principle of risk aversion and how it is applied.
Some people may not find the arguments easy reading. But they undoubtedly address a key issue: how to adapt -perhaps change- the rules of free trade to take account of the new requirements related to protecting the environment or, to put it another way, how to restore a concern with the long term to the rules of international trade, to ensure both that they are respected and yet not wrongly exploited for protectionist reasons.
The article is not just about the national and international public bodies -the World Trade Organization in particular- but also about businesses facing the problems of where to locate their activities and how to remain competitive in world markets.