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Working Paper

A Korean Perspective of Trade and the Environment Issues : What's Ahead and What's to be Done?

페이스북
커버이미지
  • 저자 한진희(韓震熙)
  • 발행일 1996/10/01
  • 시리즈 번호 9609
원문보기
요약 In this paper, issues on trade and the environment were
presented and an attempt was made to draw out main concerns
of Korea, even though much of those concerns are not
necessarily specific to Korea. where relevant, problems or
usefulness of the arguments were noted. For example, it was
argued that trade measures to address PPMs are not efficient
especially when the environmental problems concerned are
limited to a national boundary. Instead, eco-labelling schemes
seem to be a promising alternative to trade measures in that
they provide consumers more information on the product.

The effects for internationally proposed environment-related
policies were assessed on the Korean economy by comparing
some relevant data with OECD countries. By looking at the
export share in GDP, the share of dirty goods exports in total
exports, and th growth rate of GDP, it was concluded that the
possible negative effects of such policies are not likely to be big
compared to OECD countries, especially in the long-run.
However, if the degree by which the environmental compliance
costs which have been paid by private sectors differs across
countries, then this conclusion is not likely to hold up.

It was specifically argued that Korea is likely to be severely
affected by proposals to freeze the amount of CO2 emissions to
the current level due to a high energy consumption growth and
a high energy and emission dependent production structure. In
addition, it was pointed out that environment-related policy
proposals are abased on some cross country cost allocation
principle. For example, it was shown that if a targeted level of
energy consumption or tax rate is linked with the per capita
level of energy consumption than the negative effects on Korea
will be mitigated.

What can we learn firm the above discussions about the
future directions of trade environmental policies of Korea? Is the
current situation an opportunity or a danger we have to protect
ourselves from? In our view this is an Opportunity. We can take
advantage of this situation in order to improve domestic
environmental quality, upgrade domestic environmental policies in
conjunction with advanced environmental policies of developed
countries, adjust the industrial production structure in an
environment-friendly way, and maintain sustained economic
growth through environmentally sound exports. This viewpoint is
also supported by the already high domestic demand for a clean
environment. By neglecting the issues of today to gain in the
short-run, we stand to lose much more in the long-run.

In order to take good advantage of this situation, however,
more research has to be done on what efforts need to be made
and in what direction. There are, however, several obvious
implications on this from the above discussions. First,
environmental externalities have to be internalized in a cost
efficient way. As was pointed out above, even trade liberalization
without appropriate environmental policies does not guarantee
maximum gains form trade. Cost efficiency of environmental
policies is important since it reduces the potential conflicts of
environmental goals and other policy objectives, such as
employment and income distribution. For this purpose, in addition
to introducing necessary laws and regulations, the roles of
governments, central and local, firms and consumers in each
field of environmental problems must be established. The
experiences of environmentally advanced countries might help
here.

Second, some adjustments in production and in the trade
structure are necessary. As seen above, Korea has an energy
intensive production structure and, therefore, is vulnerable to
some international policy proposals such as tax on CO2
emissions. It was also noted that Korean exports are highly
dependent on several large countries, which often creates trade
disputes and puts Korea in a vulnerable position. The adjustment
into a less energy dependent production structure and a more
diversified export markets are likely to be beneficial for Korea.

Finally, more research on Korea has to be done in areas of
trade and the environment. Among other things, it is urgent that
an internationally compatible data base on Korea related to
environment bo constructed, in order to examine further issues
such as the effects of environmental compliance costs on
industry, the effects of international policy proposals on Korea,
and fair and efficient domestic and international cost allocation
principles for achieving a cleaner environment.
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