When saving the dolphins clashes with free trade, new world order in doubt

ENVIRONMENTALISTS and free-trade advocates tend to be dissimilar sorts of people. The former are often convinced that saving the whales, the rain forest, and the spotted owl are callings that brook no compromise. The latter can be economists prone to words such as ``maximization'' and the calculation of social benefits via algebra.

Such entirely different cultures are likely to squabble bitterly as the year 2000 approaches.

Somehow the United States will have to ``minimize those frictions on trade and the environment, because they're coming,'' says Michael Aho, a Prudential Securities economist in New York. ``We can't, like economists, assume them away.''

The immediate problem is that environmentalists are extremely distrustful of new world-trade accords. They worry that uncaring, faceless international bureaucrats will undermine US national environmental standards by judging them protectionist.

To justify their concern they point to precedents, such as a 1991 General Agreement on Tariffs and Trade panel decision that a US ban on Mexican tuna caught with dolphin-killing nets was an unfair trade impediment.

Many environmentalists think the GATT shouldn't be able to challenge national social policies. Furthermore, they worry that growing world trade will increasingly put nations with expensive environmental standards - such as the US - at a competitive disadvantage. Labor organizations have similar social worries about foreign pressure on US wage levels.

Thus many national environmental groups oppose the expansion of the GATT as negotiated in the so-called Uruguay Round of talks. The US Congress is considering ratification of this expansion, which lowers trade barriers among some 120 nations.

``We're saying this is a direct threat to [US] sovereignty,'' says Larry Williams, Sierra Club director of international programs in Washington.

ECONOMISTS reply that many environmental objections to trade pacts are overblown. They point to the fact that the notorious tuna-dolphin decision has never been implemented by the full GATT. Furthermore, free-trade advocates say that the line between legitimate concern and a protectionist wolf in environmental sheep's clothing is very difficult to determine. They vehemently object to the use of trade benefits as a stick to compel higher environmental standards in developing nations.

Daniel Esty, a Bush administration official and now a senior fellow at the Institute for International Economics in Washington, has just finished a book about making the GATT and world trade more environmentally sensitive. In the short run, he recommends making trade organization dispute-settling procedures more sensitive to environmental concerns. In the long run, he says environmentalists need their own GATT - a Global Environmental Organization.

GEO could create a forum for collective action on global pollution problems. It could help more countries work toward practical market-based environmental regulations.

``To the extent that environmentalists bet their future on protectionist policies they are backing the wrong horse,'' Mr. Esty says.