The Best Way to Coordinate Trade and Environment: Internalization of Environmental Cost

With the main trend of economic development,environmental pollution has become increasingly serious.And international trade was blamed for the environmental deterioration.The paper discusses whether trade and environment can coordinate and how it can be realized.At first,it expatiates the conflicts between environmental protection,and analyses their complicated correlation.Through further economic analysis we can reach a conclusion that the basic reason why trade and environment conflict with each other is not free trade but the market failure made by the externality of environmental cost;and the best way of resolving this problem is to carry out internalization of environmental cost.Through cost internalization,market failures can be corrected and resources allocation can be optimized in the efficient market system.Under this condition,trade has no effect on environment,and finally makes for the sustainable development of social economy.