The impact of environmental regulations as trade barriers

We all understand how green regulations reduce pollution and help our environment and understand the importance of a good environment to our health and living standard. However, some people see that green regulations put heavy burdens on businesses' shoulders and may potentially slow down the economic growth. The US Republican nominee, Donald Trump, even once said that the climate change was made by the Chinese government to keep the US businesses out, which is definitely wrong and nonsense; but it shows that people generally believe that environmental regulations increase the cost of the businesses. I would like to discuss about the impact of environmental regulations as a trade barrier.

Imposing environmental regulations on imports is not a new thing that the EU and the US have imposed different environmental imports, the most recognized one is the one imposed on the cars. Such regulations raise the bar and reduce the amount of certain chosen imports, and sometimes are considered as tools to lower the trade deficits. However, environmental regulations are not only imposed on the imports, but also partially on domestically produced goods, as the environmental issue cannot be discriminated between the domestic products and the foreign products. This means the country needs to have comparative advantages in its green industries in order to take advantage of the environmental regulations and improve the country's trade balance. Foreign businesses still have opportunities to maintain their market shares after environmental regulations by investing more into the environmentally friendly technologies.  This can create pressure on the domestic businesses and force them to keep or even speed up their environmentally friendly technological development. Both foreign and domestic businesses will put more efforts in the environmentally friendly field.

To conclude, environmental regulations could be used as trade barriers to reduce trade deficits in the short term if the country has its comparative advantage, and in the long term, environmental regulations could speed up environmentally friendly technological improvement on a global scale.