By David Vogel
New York: Oxford University Press Inc., 1996
ISBN 0-19-507824-1

Trading Up: Consumer and Environmental Regulation in a Global Economy (Harvard University Press, $35) analyzes the increasingly important and often conflictual relationship between trade liberalization and government regulation of health, safety, and the environment..
The first comprehensive account of trade and regulation on a global scale, Vogel’s book systematically explores the regulatory dimensions of the newly established World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA), the Free Trade Agreement between Canada and the United States, and the treaties that created the European Community and Union. It describes the increasing efforts of trade agreements and treaties to subject national regulatory policies to regional and international scrutiny.

These trade disputes, which cover regulations ranging from Danish recycling laws to American fuel economy standards show how difficult it is for international institutions and trade agreements to distinguish between legitimate consumer and environmental standards and the use of such regulations as disguised barriers to trade.

The title of Vogel’s book reflects his central conclusion that trade liberalization often brings about the strengthening of regulatory standards. Trading Up challenges the claim of some consumer and environmental groups that the removal of trade barriers will usually drive national regulatory standards down to their lowest common denominator. Instead Vogel argues that the removal of trade barriers can and does enable "greener" nations to "export" their stricter standards to their less green trading partners.

Vogel calls this phenomenon the "California effect," after the state that has been a leader of consumer and environmental protection both within the United States and globally. Thanks to the large size and wealth of California's market, both the European Union and Japan have altered their own automobile emission standards to make them more similar to California’s, which have historically been the world’s most stringent standard.

Likewise within the EU, Germany's strong environmental standards are increasingly being adopted by other European nations. "Indeed, the willingness of Germany's automobile manufacturers to support stricter EU standards was in part due to their experience in producing vehicles for the American market."
Accordingly, while the relationship between more liberal trade policies and stricter regulations is likely to remain highly contentious, the two policy goals are not incompatible. Trading Up demonstrates that each can reinforce the other, a conclusion with important implications for the future of American trade and regulatory policies. The stronger the trade agreements, Vogel argues, the more likely "the California effect" will operate.

Vogel explores in depth a number of trade and regulatory conflicts that have surfaced in recent years, many of which do not support the optimistic hypothesis of the "California effect." In an effort to reduce the role of regulations as non-tariff barriers, trade liberalization occasionally does undermine national regulatory sovereignty. International institutions and trade agreements distinguish between consumer and environmental protection and trade protectionism. The business of drawing this line can be both complex and contentious, Vogel finds.

Consider US regulations banning the sale of tuna caught with nets that kill large numbers of dolphins. When US law extended the domestic wildlife protection act to imported tuna, it prompted a rancorous dispute with tuna-exporting nations asserting that the US was erecting non-tariff barriers to trade. The case wound up before the General Agreement on Tariffs and Trade, (now the WTO) where a dispute panel unanimously ruled against the US, concluding that, regardless of intent, its regulation had substantial protectionist consequences. By striking against a popular environmental measure, the GATT ruling aroused the hostility of many environmental organizations.

Responding to this and similar trade disputes, consumer and environmental organizations have become increasingly active participants in trade politics. Alliances between protectionist producers and consumer and environmental groups opposed to trade liberalization have become commonplace in western Europe, the United States, and Japan.

However, these green coalitions continue to elevate environmental standards. In the NAFTA debate, pressures by US organizations caused Mexico not only to increase environmental safeguards, but also to strengthen their enforcement. Vogel claims that NAFTA, which-thanks to pressures from environmentalists-is the greenest trade agreement ever negotiated by the United States, will in the long run bring Mexican regulatory standards more closely in line with those of its northern neighbor.


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Updated May 16, 1996
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