Eco-dumping is more myth than reality for two reasons: First, environmental costs are generally not a significant influence on competitiveness, and when they are, their effect is hard to separate from that of labour, energy and other costs. Second, governments do not deliberately attempt to help their industries through adjustments to environmental policies. Empirical research indicates that the costs of compliance with environmental regulations has had little or no impact on the overall competitiveness of countries, as measured by trade balances and changes in trade patterns. Environmental costs may have more significant impacts on selected sectors or firms where environmental costs are higher than average and which may be experiencing other types of competitive difficulties. But the relative role of environmental factors is difficult to pinpoint. In addition, stringent environmental regulations may help rather than hurt the competitiveness of certain sectors who are prompted to innovate and to market green products. Lax environmental standards may detract from rather than contribute to competitivenss, particularly in the longer-term.
There is also little evidence that environmental compliance costs have caused firms to relocate polluting facilities to countries with more lax environmental standards, thereby creating pollution havens. However, there has been a migration of so-called "dirty industries" from developed to developing countries as part of a global restructuring of industry. This has led to an acceleration of industrial pollution intensity in developing countries, which will not contribute to their sustainable development or longer-term competitiveness. Differing environmental standards are generally the reflection of differing ecological and economic conditions or environmental preferences rather than the strategic interventions of governments. Because pure eco-dumping is rare and is not deliberate, policy responses such as countervailing duties or minimum environmental standards are not appropriate. Governments should develop policies to help ease the negative competitiveness effects of environmental standards on their vulnerable sectors and firms, which might include improved design of environmental regulations and appropriate use of environmental subsidies.
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