Monday, June 23, 2014

[Extra] A problem with international trade


A problem with international trade is that it externalizes costs on a grand scale. Tropical hardwood products can be sold extremely cheaply in the US. The environmental costs of producing those hardwood products occur far from the consumer who buys a piece of cheap Brazilian plywood. Making matters worse, the environmental costs of the plywood usually exported to places where there are few legal controls on pollution and resource extraction. A factory in the US, for example, is legally bound to minimize its production of air and water pollution. Pollution control can be expensive, and internalizing this cost makes a factory less profitable. A similar factory in Mexico might have far less responsibility for pollution control, making it cheaper to produce goods there than in the US. Ongoing protests in the US and elsewhere around the world against the WTO(World Trade Organization) and other forces of globalization have been largely about such exporting of massive environmental and social costs of production.


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