International trade, while promoting economic growth and development, is one of many suspects contributing to excessive rates of environmental degradation. Free trade compromises environmental quality in favor of welfare improvements and economic prosperity. The difficulty of measuring environmental amenities, trade theory’s inability to address externalities and decisions overtime, and numerous market failures regarding socially optimal prices, serve as red flags requiring intervention. The most successful form of intervention is domestic policies that internalize externalities. Intervention is also necessary to balance the interests of environmentalists and free traders and to ensure that the gains from trade are devoted to environmental protection
