International Process Standards and North–South Trade

This paper examines the choice between alternative trade-based approaches to reducing global environmental damage, such as trade-related process standards and tariff-based approaches. Estimates of the effects of alternative policies are presented, using a calibrated global trade model with pollution externalities. It is found that both trade-related process standards and tariff-based policies are rather ineffective at reducing global emissions. The adoption of general process standards, however, might be exceedingly costly to developing countries.