Eco-labelling and the trade-environment debate

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Journal Article
The World Economy, 2005, 28 (1), pp. 49 - 62
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The purpose of this paper is to consider the potential global environmental benefits of eco-labelling programmes, paying attention in particular, to internationally traded commodities. This is important for two reasons. First, we shall argue that in some instances the impetus behind the introduction of eco-labels is that they are seen as an alternative to more trade-restrictive environmental policies, such as import bans or tariffs on goods with harmful environmental effects. In such cases, however, it is desirable to consider the extent to which eco-labelling programmes and trade restrictions might be substitutable with respect to their impact on the environment. Second, eco-labelling requirements for traded goods may be quite costly due to the potential for abuse of labelling requirements as technical trade barriers, and the costs of compliance, such as monitoring foreign production methods. In view of these costs, there is a presumption that ecolabelling requirements for imported goods should yield significant environmental benefits.
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