Every year more than 7 billion tons of goods are imported and exported around the world. These international exchanges are made possible by cheap transport and cheap labor. It is often more cost-effective to import a product from the other side of the world than to make it locally.
These two factors may well change, however. Firstly, the cost of labor in emerging economies could rise with the appearance of a middle class. In China, for example, salaries in urban areas are increasing by more than 10% per year and in 2007 reached an official average of 3,500 USD per annum. Countering this trend, however, is the relocation of industries to poorer zones; China is now moving its factories to Bangladesh.
Secondly, the inevitable rise in oil prices will have a knock-on effect on the cost of imports, even though fuel often only accounts for a small percentage of the final price. Above all, international trade is only possible because prices do not take into account the environmental costs, or “externalities.” Roads cut through ecosystems; ships, aircraft, and heavy duty vehicles emit greenhouse gases and other toxic substances; mineral and energy extraction processes create pollution. Numerous economists have tried to integrate such environmental costs into the price of goods, but while suitable models do exist, they have not been implemented for fear of upsetting the economic system.
Relocating production also means passing on its environmental costs to the manufacturing country. In 2008 China became the number one producer of greenhouse gases, with one third of its emissions coming from the industrial exports sector which notably produced goods bound for the United States and Europe. Environmental accountability, both on the part of suppliers and their clients, will soon become a burning question. Climate change is a global phenomenon which has repercussions no matter where energy is being consumed or greenhouse gases are being produced.