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The effects of trade and trade liberalization on the environment are complex and myriad. One can analytically distinguish the main ones as scale, compositional effects, transport, static efficiency, dynamic efficiency, and governance effects. Some of these are likely to be predominantly positive (e.g., dynamic efficiency) or negative (e.g., transport), but the remainder are heavily context‐dependent such that trade and trade liberalization cannot be said to be unambiguously positive or negative for the environment. What seems clear, however, is that with suboptimal environmental policies in place, further trade liberalization is likely to exacerbate the detrimental environmental effects of negative externalities. Equally, however, if accompanied by efficient environmental policymaking liberalized trade can promote environmental protection.
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