The Research On International Trade, Environmental Quality And Environmental Regulation

Trade liberalization has influence on the environment. There are two different viewpoints in the existing research:One is that free trade is negative to environment no matter short or long time, especially to the developing countries. Another is that free trade might be harm to the environment in the short time, the quality-of environment will gradually be improved due to the adjustment of industrial structure, the development of the technology and the demand for high quality of environment. An important factor in determining the relationship between trade and environment is the policy of environmental regulation. If a country has a lax environmental regulation policy, the negative impact resulted from the expansion of pollution-intensive industries would be greater than the positive effect of technology and structure effects on the environment. On the contrary, if a country has a stringent environmental regulation policy, the development of the pollution-intensive industries will be restricted, and the negative impact resulted from the size effect of trade on the environment will be less than the positive impact of technology and structure effects on the environment.Since the reform and opening up, China’s economic develops rapidly, at the same time, the environment is also deteriorating. So some questions are put forward: Whether trade liberalization bring benefits to our country or make us in immiserizing growth trap? What’s the mechanism between international trade and environmental quality? In the background of economic globalization, whether is China’s environmental regulation policy an important reason to cause environment pollution, will it attract international pollution-industries to China, and make China become the "pollution haven". Is there a trade development mode which can not only produce good trade interests, but also reduce the expense of of China’s resources and environment? Therefore,the research on international trade, environmental quality and environmental regulation has an important practical significance for China’s trade policy, industrial policy and environmental policy.This article seeks to answer these questions by studying the relationship of international trade, environmental quality and environmental regulation, we adopt two methodology in this paper. One is mathematical models, anonther is case studies. The methods are both used with the mathematical theory model as a microscopic foundation and case studies and regression analysis as explanations. Using these methods, the paper gives a detailed explanation to the relationship between international trade, environmental quality and environmental regulation.There are theoretical models and empirical research in this paper. The theoretical part has two theoretical models:the first is a general equilibrium model based on Antweiler, Copland and Taylor (2001), we derive and analyze the mechanism of action that exports, imports and trade surplus with the Environment, by changing the functional form of the consumer effect in Chapters Two. The second is the model of environmental regulation and trade patterns based on the H-O model in Chapter Four. While using the existing models.As the basis of the theoretical analysis, the first model analyzes the factors affecting the environment and the mechanism of the factors and environment in open economy. The utility of consumers is not only a function of the domestic product output, but also is related to import and export commodities. We correct the mechanism on trade and environment model and draw two main conclusions:(1) Trade liberalization affects the adjustment of commodity trade structure by affecting commodity prices, and have an impact on environmental quality. If trade liberalization increase the output of the pollution-intensive industries, environmental quality will decline. On the contrary, if trade liberalization reduces the output of the pollution-intensive industries, environmental quality will be improved. (2) Substitution effect, income effect and trade surplus effect caused by trade liberalization has an indirect effect on the environment through the pollution emissions tax.The second model analyzes the relationship between environmental regulation policy and trade patterns based on the mechanism of trade and the environment. The purpose is to conclude what kind of environmental regulation policy may improve the relationship between trade and environmental quality. We have come to the conclusion that countries with lax environmental regulation have a comparative advantage in pollution-intensive industries and the countries with strict environmental regulation have a comparative advantage in clean goods.Empirical content of the article has three parts. First part is a statistical description of the foreign trade and the environment since the reform and opening up in China. This part uses the method of longitudinal investigation and horizontal contrast. In longitudinal investigation we analyze the characteristics of foreign trade development, industry characteristics and the changes of environmental quality. Through the comparison of trade and the environment in the 29 provinces of China we conclude the relationship between trade and environment, in addition, the factor endowments, the economic development and industrial structure is also important factors affecting the environment.The second is divided into two parts. One is that we use Chinese provinces panel dates to set a regression model examining the relationship between trade and environment with results showed that:(1) The Environmental Kuznets curve is tenable in China and we also calculate the inflection point of the environmental Kuznets curve which are located in the left half of the EKC in most provinces. (2) The impact of trade on the environment is significantly negative. (3) The impact of per capital on the environment is related to the types of pollutants while technology can reduce the pollution but not significantly. The reason is that we heavily depend on foreign technology and lack of innovation and R&D. Another is that we decompose the environmental impact effect into scale effects, structural effects and technology effects proposed by Grossman and Krueger (1991), and conclude that negative effects caused by scale effect is greater than the positive effect caused by the structural effects and technological effects on the environment and that the total effect of trade on the environment is negative.The third tests the relationship between environmental regulation and the export of the pollution-intensive products. We use the extended trade gravity model and the data between China and the 34 main trading partner countries during 1992 and 2007, introducing the proxy of environmental regulation, and verify that the lax environmental regulation policies will stimulate the export of pollution-intensive products in China, which is a important reason for the rapidly expanding in trade and increasingly serious environmental pollution.Finally, this paper provides some policy implications and suggestions about the environmental issues caused by trade liberalization based on previous analysis. We also illustrate the trend of research on international trade, environmental quality and environmental regulation.