International Trade and Environmental Policy in the Postcommunist World

Abstract

This article examines whether commercial openness has affected environmental policy in the postcommunist countries of Central and Eastern Europe and the Commonwealth of Independent States. During the Cold War, these countries had closed trade regimes combined with little environmental regulation and poor environmental quality. Since the fall of the Berlin Wall and the breakup of the Soviet Union, many postcommunist countries have engaged in extensive trade liberalization. Some countries, however, have been slower to open their markets, and others have maintained highly protectionist trade policies. Have countries that opened up to global markets improved their environmental policies, or has increasing exposure to the international trading system undermined efforts to improve environmental policy? The results indicate that trade openness undermined a key element of environmental policy in the region by reducing governments' ability to collect environmental taxes and support environmental investments.