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Supporters of globalization call for the non-use of environmental standards to hinder free trade, and for the fight against new forms of protectionism (ecological bidding, green dumping...). However, environmentalists are constantly urging governments to extend all trade agreements to include cooperation towards a healthy environment.In fact, free trade and environmental quality are reconcilable: this is the logic of the double dividend in the broad sense. Strictly speaking, however, the double dividend theory (Goulder, 1994) is achievable through the use of eco-taxes and tariffs. Substituting the former for the latter encourages depollution and generates public revenue to compensate for the drop in tariff revenues. Free trade is thus achieved.To maximize social well-being, we need to study the interdependencies between ecotaxes and customs tariffs. They determine countries' specializations, as well as the effects on terms and gains of trade. Reciprocal dependencies are highlighted between the two fiscal instruments for optimal welfare in North and South.
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