Issues Of Internalization Of Environmental Costs Under International Trade

Since the 1980s, the global environmental problem has been deteriorated. The second generation global environmental problems are characteristic of warmer climate on the whole globe and the destruction of biodiversity. Therefore, the complicated situations must be faced in which the first generation global environmental problems which are typical of industrial pollution and destroyed ecosystem are interlaced with the second generation global environmental problems. It is universally acknowledged that to fulfill the internalization of environmental costs is an effective way to control and solve environmental problems. But as to how to coordinate among different countries and promote internalization of environmental costs worldwide remains a challenge to global society and people's focus.With the focus on the issues of global environmental problems in open economy, this paper analyses different effects of the international trade mechanism on a country's environment and global environment respectively. This paper analyses the causes of the differences of internalization of environmental costs among different countries through a modal that an industry maximizes its welfare. Then the paper analyses the effects of internalization of environmental costs on international trade and the resulting conflicts about international trade. Finally, the paper makes some suggestions on how to adjust China's foreign trade policy and relative domestic policies based on Chinese situations in environmental problems and internalization of environmental costs and the trends in global internalization of environmental costs.The paper concludes that the fundamental difference between global environment and a country's environment is the nature of global public goods. The fundamental reasons of the difficulty in solving global environmental problems are the vacancy of global government and lack of financing mechanism. The paper also concludes that the different degree of internalization of environmental costs among various countries is the result of welfare maximization of a country. It is assumed that industrial differences and differences of environmental externalities in different fields are the key factors influencing the degree of internalization of environmental costs.