An Environmental Impact Assessment of China's WTO Accession: An analysis of six sectors

China’s accession to the World Trade Organization (WTO) has been an event of exceptional importance. Its impact on China’s economy has been remarkable but the environmental consequences have also been undeniable. It has created opportunities and challenges for improved environmental management, all of which require determined action on the part of the Chinese authorities.

Certain environmental consequences are the result of growth. In many instances the need for careful management of these consequences is well known. Growing industries are dynamic and engaged in processes of innovation, so often opportunities exist to find solutions that protect the environment without impacting growth. The textile sector is a good example.

Trade liberalization not only promotes increased production; it also creates consumer surpluses associated with falling prices or increased quality. Again there are important environmental measures that can be taken to ensure that the consumer surplus also serves environmental needs. These are particularly pronounced in the automobile sector, where prices are currently falling, creating a one-time opportunity to accelerate the introduction of emission standards.

Part of the process of structural change associated with trade liberalization is that certain economic sectors or activities will be reduced because their products can be imported at lower cost or higher quality. Such sectors are less likely to be innovative and do not benefit from the new resources associated with growth. Yet these sectors may still present specific environmental problems that require the attention of policy-makers; these are among the most challenging aspects of the trade and environment debate. Examples may be found in agriculture, which is resource-intensive rather than labour-intensive.

Our report reflects all of these opportunities and challenges. It represents what is probably the most comprehensive assessment undertaken by any country of the environmental consequences of a single trade agreement. It is part of the result of 18 months of intensive work by a large group of researchers and the responsible officials of the State Environmental Protection Agency and the Ministry of Commerce. As co-chairs, we wish to extend the sincere thanks of the Task Force on WTO and Environment to all those who have contributed to this work. We also wish to thank the Swiss State Secretariat for Economic Affairs for its support of the Task Force and of the research that was necessary to understand the environmental impacts of China’s WTO accession and to prepare our report to the China Council for International Cooperation on Environment and Development (CCICED).