Impact of Free Trade on Industrial Pollution: Do Pollution Havens Exist?

This article examines empirically the effects of international trade and international trade agreements on the environment of a country and countries in the APEC regional co operation, and the way these effects pertain to international environmental policy. It examines how the structure of manufacturing exports and imports varies both across countries and through time, and focuses on dirty-product migration from developed countries (DC) as a result of trade liberalization. Results show that dirty products have expanded faster in developing countries than the average of all industrial countries over the past decade. Testing of the pollution havens hypotheses, however, is hindered by the lack of evidence of freer trade flows due to different environmental standards. The international pattern of dirty-product migration in the APEC region using a two-stage regression with cross-section data sets from two different years, statistically tested that the macroeconomic and import tariffs had the relatively highest significant influence. It has also been concluded, however, that the difference in environmental standards between DCs and LDCs was not a significant variable influencing the location of dirty-product import.