It has been recognized that trade restraints and environmental degradation are equally costly (both usually reduce GDP by about 2 percent), and are thus equally worth controlling.
Clarification of the relationship between WTO rules and environmental policy is interpreted to mean that negotiations would lead to the identification of common agreed principles for trade and environmental agreements (e.g. PPP, a version of the precautionary principle), and that the use of these principles would be better legitimised with the WTO rules framework. The impact of these clarifications within the EU would be concentrated in particular sectors, and would occur mainly in the economic sphere, resulting largely from the application of the principles to imports. To the extent that European producers could conform to the environmental standards being applied in conformity with the agreed set of principles, there would be a net economic gain in terms of import-substitution production. The environmental gains would be widely distributed in different country groups. Social benefits in terms of the application of human health protection may be linked to the application of the precautionary principle.
Each nation has the right to choose its level of environmental protection. As more nations seek admission to the WTO, the WTO's qualifying standards are expanding - from transparent trade laws, to intellectual property protection, and perhaps in the future, market integrity. Just as economic corruption undermines trade efficacy, environmental corruption can distort trade relations, and nations should not be required to condone it in their market activities. This qualifier parallels the WTO's membership qualifications for protection of intellectual property. Protection of our planet's environmental future – and the integrity of the world's trading system – demand no less.
The liberalisation of trade could lead to increased economic gains and environmental losses. If, however, environmental rules were effectively applied, there could be a net environmental gain, with the elimination of subsidies which encourage over production and over-use of pollution-intensive and resource-intensive products.