International trade and environmental regulation are generally considered to be interdependent, and with the CEECs now being integrated into international markets, questions arise about &nbsphow environmental issues should be considered during this process and which institutional framework is appropriate. In Discussion Paper No. 1045, Research Fellow Michael Rauscher reviews the theoretical and empirical literature on trade and the environment and shows that the empirical evidence of a close link between international trade and environmental issues is not particularly strong. He also looks at the environmental policies of the CEECs and at their comparative advantages.

The main part of the paper deals with trade law and institutions that are of major importance in the context of environmental disruptions, and with environmental policy instruments and institutions that affect the patterns of trade and can be used for protectionist purposes. These are discussed in the context of the experience with existing international agreements. The major questions are: first, how the capture of environmental regulation by protectionist interest groups can be avoided; second, under which circumstances the CEECs should adjust their environmental standards to West European levels; third, whether and when green barriers to trade should be used; fourth, what can be done to avoid harmful tax competition in the field of environmental regulation; and last, how can international disputes be resolved.

Trade Law and Environmental Issues in Central and East European Countries
Michael Rauscher

Discussion Paper No. 1045, June 1995 (IT)