Environmental Barriers to Trade: The Case of Endangered Sea Turtles

In April of 1998, the World Trade Organization pronounced the US Sea Turtle Conservation Act in violation of the GATT. This paper presents a stylized Heckscher–Ohlin–Samuelson model in which the fatal entrapment of sea turtles in nets of the shrimping industry is a negative externality that reduces global utility. Three trade equilibria are simulated: free trade, trade ban, and free trade with subsidization. With free trade, a transfer of abatement capital from the North to the South results in a Pareto improvement upon the trade ban. The simulations indicate that a cooperative outcome which obtains global efficiency may be feasible but is improbable.