Will environmentalism become the new protectionism? Twenty-three experts weigh in.

• Position: A SYMPOSIUM OF VIEWS

In an increasingly globalized world, opponents of free trade--whether seeking to restrict wage erosion and the loss of jobs on behalf of labor or to guard markets from competition of behalf of business--are starting to see environmentalism as a valuable protectionist tooL For example, if the Kyoto Protocol forces carbon-intensive industries to move to the less-developed countries, will developed world policymakers be tempted to impose carbon standards on imports from those countries in an effort to level the playing field? How would such restrictions affect economies such as China and India that are making a conscious tradeoff between higher economic living standards for their citizens at the cost of an increasingly degraded environment? As a related issue, to what extent will public and private environmental spending become for the industrialized economies an economic hedge--a new source of domestic demand?

OTTO GRAF LAMBSDORFF Former German Federal Minister of Economics

Beyond doubt, environmentalism is gaining momentum-not only in politics, but also in business. Customers are increasingly willing to pay extra for environment-friendly goods in the light of noticeable climate change. Of course, companies want to take advantage of the market's readiness to pay higher prices.

In this context, protectionism is a promising tool for domestic producers to safeguard high margins by excluding international rivals. For instance, instead of competing for cheaper and better products, European manufacturers of electronics achieved in 2002 surcharges on imports of energy-efficient bulbs from China. The 66 percent duty is more than dubious as Europe's leaders are at the same time urging households to make use of exactly these energy-efficient light bulbs. If the duty ended, market prices of energy-efficient bulbs would equal those of conventional ones.

The consequences of this kind of protectionism are two-fold: first, domestic manufacturers are not forced to produce more cost-efficiently; and second, many customers who cannot afford the artificial high prices continue to purchase conventional bulbs. The European Commission acts Janus-faced: While defending unnecessary high prices for energy-efficient bulbs due to successful lobbying, it is striving for a significant reduction of carbon dioxide emissions.

Obviously, the attractive international market for environment-friendly goods must stay free of protectionism for our planet's sake. Only if premium energy-efficient products become affordable for the majority can a pivotal contribution to environmental protection be made. By the way, Australia has just decided to ban incandescent bulbs. Instead of intervening, governments should more often trust and release market forces to boost environmentalism. The promotion of free trade would be a sufficient first step toward lowering the energy-efficient bulbs' pricing and as a consequence changing consumer habits. If the Chinese can offer eco-friendly products under more favorable conditions, let them do the business.

JAGDISH BHAGWATI University Professor, Columbia University, and Senior Fellow for International Economics, Council on Foreign Relations

One needs to distinguish between domestic environmental phenomena (for example, polluting a lake entirely within your own jurisdiction or disturbing the peace through noise-making in a library) and international ones where environmental spillovers occur, the latter being multilateral (such as global warming) or plurilateral or bilateral (such as acid rain).

I have long made the point (see volume one of Fair Trade and Harmonization with Robert Hudec from MIT Press) that there is absolutely no logic in arguing that the "polluter pay" tax rates for domestic pollution must be identical everywhere, and hence the demands for countervailing any difference in tax rates by pretending that those with lower rates are indulging in "social dumping" merit a riposte and a rebuff. The same logic applies to the agitation for raising labor standards in the poor countries in the direction of our standards.

In both cases, the proponents of harmonization of foreign nations' standards with ours are afraid of competition. Fearful of competition, they wish to "level the playing field," to "flatten the earth" (the absurd metaphor of Thomas Friedman), to raise the cost of production as far as is politically possible to make our lives comfortable. This is what trade economists call "export protectionism."

On global warming, there is a good logic to saying that the carbon tax everywhere should be identical. Yet if India and China are to be taxed equally with the United States and the European Union on the carbon dioxide they emit currently (the "flow" aspect), there must also be a Superfund where the rich countries who polluted in the past pay for the damage imposed (the "stock" aspect). The 1997 Kyoto Protocol to the Framework Convention on Climate Change has to be revised; it is a conceptually muddled set of political compromises mixing up the stock and the flow aspects--see my August 2006 Financial Times article on the subject. The question of protectionism would not arise in such a revised Kyoto.

ROGER M. KUBARYCH Chief U.S. Economist, Unicredit Markets and Investment Banking, and Kaufman Adjunct Senior Fellow for International Economics and Finance, Council on Foreign Relations

Some of the most avid, and effective, ecologists are also committed free traders. That's why efforts to raise environmental standards globally need not lead to greater protectionism in trade--so long as drafters of trade agreements are vigilant against those who try to sneak in provisions with protectionist intent.

One example is provided by the fierce debate that preceded Congressional approval of NAFTA. Back in 1991-93, some environmentalists opposed it, claiming that Mexico would become a worse polluter. But prominent advocates, including NAFTA's spiritual father, Rodman Rockefeller (then U.S. co-chairman of the Mexico-U.S. Business Committee), thought differently. Rockefeller was a dedicated environmentalist like his father, Nelson Rockefeller.

In a 1991 speech entitled "North American Free Trade: Economic Growth and Ecological Enhancement," the younger Rockefeller gave a stirring reminder of how a growing economy provides the resources to achieve ambitious ecological goals:

"Our nation has won the capability to be environmentally responsible. We have been through the development process of industrialization, environmental degradation, wealth creation, and ecological enhancement. Today the Hudson River is swimable and the striped bass and shad are breeding again--why? Because in 1965 the citizens of New York State decided to dedicate the resources needed to clean up the Hudson."

He went on to predict that "Mexicans will demand that a portion of the newly created resources be utilized to meet the same standards to which the American people have now become accustomed." That will take time, but there is progress.

Sound environmental standards are useful complements to trade agreements, not least because they empower concerned citizens in emerging market countries frustrated by the unwillingness of their governments to enforce their own laws. To the extent trade agreements can provide another tool to prod governments to implement environmental safeguards, they are a big plus.

JEFFREY E. GARTEN Juan Trippe Professor of International Trade and Finance, Yale School of Management

I don't think so. Although no one can predict how environmental regulation will ultimately turn out, I believe that the world is on a path where a number of protocols and standards common to advanced industrial and big emerging-market societies will evolve. In addition, major global companies are unlikely to take the risk of pursuing laxer policies in countries where environmental standards are especially lax, due to the reputational risk involved. I would be surprised, as well, if there will not emerge some prohibitions in the World Trade Organization against environmental protectionism. So on the whole, I am optimistic that environmentalism will not lead to rampant protectionism.

CHARLES WOLF, JR. Senior Economic Adviser and Corporate Fellow in International Economics, RAND

It would indeed be surprising if those favoring protectionism for any of many possible reasons were to forgo advocacy of imposing carbon standards on imports from less-developed countries that (like the United States) have not signed on to Kyoto and do not apply caps on carbon emissions. Were such impositions to be invoked, their likely economic effects on China and India would be adverse, probably leading to retaliatory tariff or non-tariff barriers by these countries on U.S. exports to them at a time when the latter have been growing more rapidly than our imports from them. Such a sequence would, among other things, further diminish prospects for resurrecting the Doha Round.

I doubt that public and private environmental spending will (or should) become a consequential "new source of domestic demand" in the United States. If and when proposals for appreciable increases in public spending for environmental purposes come into competition with public spending for health or education, it's likely that environmental spending will receive the short end of the stick. With regard to private environmental spending, a case in point may lie in General Motors' highly publicized efforts to become known as the auto industry's "greenest company" through large research and development outlays for advances in fuel-economy and alternative-fuel technologies. In considering whether to add to holdings of GM stock, I would not be impressed by such outlays as promising to relieve GM's more urgent problems of legacy costs, lagging innovative design, and until recently at least, management inefficiency.

JAMES K. GALBRAITH Lloyd M. Bentsen, Jr., Chair in Government/Business Relations, Lyndon B...