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Globalization and Trade


Introduction
Species once spread across the earth very slowly, blocked by deep oceans and varying climates on land. Human beings took more than one million years to move from Africa to all the other continents. Human trade and communication over great distance dates back more than 2,000 years, when products first began to travel between China and Europe along the Silk Road. Within a few centuries the Silk Road carried Buddhism from India to China. It was the desire to trade that drove European nations to develop great sailing ships at the end of the fifteenth century, breaking the Venetian monopoly on trade with Asia and causing the European discovery of the Americas in 1492. These ships became the technology that allowed large numbers of plants, animals, people, and viruses to be transported from one continent to another.

During the European colonial period, traders, invaders, settlers, and slaves were transported via ocean-going ships from one continent to another. These colonists brought new diseases and exotic species with them that ravaged human populations and ecosystems in Asia, Africa, the Americas, and Australia. The modes of transportation, and the speed at which items have been transported, have increased exponentially over time. As these capabilities have developed, new communications technologies were introduced that have enabled corporations, governments, and militaries to significantly increase the transportation of goods, services, and information from continent to continent.

Increases in the frequency of these intercontinental contacts is known as the process of globalization. American political scientists Robert O. Keohane and Joseph S. Nye, Jr., define globalism as “a state of the world involving networks of interdependence at multi-continental distances.”1 Globalism has generally been increasing throughout modern history and it is this process of increasing globalism that is called globalization.

Since the 1990s, globalization has become a major concept in academia and activism, with different groups understanding it in many different ways. Keohane and Nye advance a broad understanding of globalization that encompasses four different processes of globalization:

  1. Economic Globalization

  2. Social and Cultural Globalization

  3. Military Globalization

  4. Environmental Globalization 2

Although scholars divide globalization into different aspects, these various types of globalization continuously interact with each other. For example, economic globalization increases international trade. Shipping of traded goods can inadvertently transport species from one continent to another. Some of the transported plants and animals (also called invasive species) thrive in the new habitat, often severely damaging various indigenous species and/or their accompanying ecosystems. In this instance, economic globalization led to environmental globalization and environmental degradation. All four types of globalization have significant impacts on the Earth’s ecosystems.

Economic Globalization and Trade
Economic globalization is particularly characterized by intercontinental trading and management relationships organized by multi-national corporations. Almost one-quarter of all the goods and services currently being produced in the world are exported to another country for consumption.3 This type of globalization has created interdependent economic systems because most national economies are greatly reliant on increased trade relations; some could encounter economic depression were trade to stop growing, as it did in the 1930s, leading to the Great Depression.4

Since the establishment of the first corporations (e.g., the East and West India Companies) by European powers during the seventeenth century, there have been major debates about the power transnational corporations (TNCs) hold in the global economy and the international trade injustices introduced by corporations that abuse their economic power. The problems often relate to the fact that the producers, consumers, and managers live in different communities in different geographic locations, and have different sets of priorities, understandings, and worldviews. For example, many goods and services are produced on one continent, consumed on another, and managed by a corporation based on yet another continent.

In situations relating to globalization, it is perhaps less likely that community moral standards will be applied to economic relationships. Managers and consumers who live in developed countries are perhaps not as concerned about the working conditions of factory workers in developing countries because they have few personal relationships with them.

There is a similar lack of concern within developed countries about environmental problems in developing countries. People are generally most eager to fight pollution where they live, therefore they are unlikely to give much thought to how the manufacture of their consumer goods causes social and environmental degradation in other parts of the world. These issues have existed since the seventeenth century and they have steadily grown in importance as globalization has becomes a more prominent aspect of contemporary culture.

During the Industrial Revolution of the eighteenth and nineteenth centuries, improvements in communications and transportation systems greatly increased the importation and exportation of goods and services in many parts of the world. This process did not escape the notice of members of educational institutions. European philosophers began to study the dynamics of international trade as it grew in the fifteenth century; their study led to the creation of the field of economics. Arguing for the mutual advantages of free trade, British economist David Ricardo theorized, in 1817, that each nation had its own “comparative advantage” in the global market of goods.5 Informed by these theories, investors sent their capital into new markets in the nineteenth century, thereby expanding the reach of multinational corporations. The mobility of labor also increased, as millions of workers seeking employment, especially from Europe and Asia, migrated to the Americas.

The wave of economic globalization beginning in the late twentieth century is characterized by the global governance of the World Trade Organization (WTO) as well as the highly technical trade negotiations now occurring in new areas such as intellectual property rights, genetic engineering, and other advances in biotechnology. As the Internet has allowed activists in many nations to communicate more easily, more sophisticated “anti-globalization” movements of workers, environmentalists, and indigenous peoples have also developed.

In general, anti-globalization movements oppose economic globalization and its effects on the environment, human rights, and cultural integrity. The names “anti-globalization movement” and, in India, “living democracy movement,” have been utilized to describe the global network of organizations proposing environmentally sustainable alternatives to economic globalization.

These organizations highlight several negative aspects of economic globalization:

  1. The World Bank, International Monetary Fund (IMF), and World Trade Organization (WTO) make decisions concerning trade and development outside of the United Nations system and with little accountability to the national governments that created them.

  2. Corporations and international investors move from nation to nation to escape labor, environmental, and consumer standards. This mobility creates great financial instability and unemployment in poorer, “single-industry” regions. National and local governments must then pay “corporate welfare” payments in an effort to entice corporations to relocate and remain within their jurisdictions.6

  3. Corporations fund political parties and campaigns, often leading elected officials to make unpopular decisions that favor corporate profits over citizen safety, rights, and needs.

  4. Governments are increasingly converting various “commons”— properties historically held in common by communities of people (e.g., land, seed varieties, and water)—into private properties held by corporations.

  5. Economic planning fails to consider the effects of growth and industrialization on the ecological capital upon which human wealth relies.

In order to help reverse many of the negative effects of globalization, different sectors of the anti-globalization movement have proposed various policies. A leading group of theorists, the International Forum on Globalization (IFG), has promoted a set of policy changes that generally fall into four categories: new measurements of economic development, stabilization of economies, local ownership, and democratic control.7

  1. New Measurements of Economic Development
    IFG promotes the implementation of new measurements to evaluate economic development in the context of ecological sustainability. Utilizing new theories in the field of ecological economics, IFG assists economists with their examination of how economic decisions impact the Earth’s life-support systems. This ideal is accomplished when measurements of economic growth reflect the manner in which economic activities are expanding or damaging opportunities for future generations.8

  2. Stabilization of Economies
    IFG promotes the stabilization of global economic conditions by curbing international financial speculation.9 Short-term investments in foreign currency markets can create havoc in the global economy by reducing the ability of national governments to maintain stable currency rates and, by extension, to keep their national economies stable. One common proposal is to implement the “Tobin Tax” on currency trading in all nations which would reduce the flow of short-term currency investments and thus stabilize currency rates.10

  3. Local Ownership
    IFG promotes the increase of local business ownership in order to reduce pollution and create stable employment situations. Increasing local business ownership may help raise environmental and labor standards for two main reasons:

    a) Local stakeholders would more than likely choose cleaner production methods because they would have a personal stake in the local release of the pollution created by the enterprise.

    b) Local stakeholders would more than likely choose better labor policies because business employees would include people (e.g., family, friends, neighbors) from their own geographic region. Local owners would also be much less likely to relocate their factory out of their home region and therefore would help preserve local jobs, stabilize local job markets, and reduce unemployment levels.11

  4. Democratic Control
    IFG promotes the assertion of democratic control over national governments and the global economy. Proposals for increasing democracy vary from nation to nation, depending upon what type of governmental system is currently being utilized in that country. In the United States, for example, the anti-globalization movement calls for the public financing of election campaigns, in order to reduce the influence of corporations on government decisions. At the global level, the movement has debated whether to reform or abolish the World Bank, International Monetary Fund (IMF), and World Trade Organization (WTO). The IFG recently proposed “decommissioning” these institutions. Under the proposal, international trade negotiations would return to the jurisdiction of the United Nations Conference on Trade and Development (UNCTAD), where developing nations have a greater voice in decision-making.12


The anti-globalization movement is also concerned with the effects of economic globalization on various cultures throughout the world. Indigenous cultures are particularly impacted because increases in economic globalization lead to rapid social changes that can easily eliminate much of their cultural heritage. This phenomenon is called social and cultural globalization.

Social and Cultural Globalization
Economic globalization has been supported by new technologies in the communications and transportation industries. These technologies have also led to an unprecedented mixing of world cultures, which has resulted in the second type of globalization, social and cultural globalization.

Although cultural inventions have been exchanged throughout history, technology is making the global exchange of ideas and inventions possible on a much larger scale than has previously occurred. The earliest globalization of technology was the spread of Chinese inventions such as paper to Africa, Europe, and the rest of Asia. The invention of paper was one of the first things to facilitate the exchange of ideas between cultures. These ideas then could catalyze revolutionary changes in many different places. For example, publications of Karl Marx’s writings first led to revolution in Russia, then to revolutions in Latin America, Africa, and Asia.

This exchange of ideology was not limited to political writings. Mass publishing, for example, has facilitated the distribution of various types of religions to every nation. Christianity and Islam in particular have spread from continent to continent through written tracts and traveling proponents. These religious influences have often had either a direct impact on local religions (e.g., through the elimination of cultures practicing a particular religious tradition) or through syncretism—the mixing of local and imported religions. Globalization has also driven change within religions, leading to secularization in some religious branches and an international wave of fundamentalism in others.

More recently, new communication technology has made entertainment imports relatively inexpensive and this has increased the amount of information that is transferred among various countries. Most of the world now watches imported movies and television programs that are primarily produced in the United States. These entertainment venues have brought American cultural conventions to the rest of the world and have had the effect of influencing, if not changing and/or eroding, traditional cultures.

The scale and effects of contemporary cultural globalization are historically unprecedented. Critics argue that the costs of this process exceed the benefits. Although cultural globalization may enrich the various cultures involved in these interactions, it may also function to marginalize these cultures by replacing the distinguishing characteristics of the culture with imported traditions, entertainment, and religious beliefs. Globally this process produces a trend toward the creation of a monoculture, because a variety of different cultural expressions are now being replaced by the expression of one single culture. These cultural losses may also be exacerbated by person-to-person cross-cultural changes made available through the possibility of rapid intercontinental travel. Airline technology has greatly increased tourism, and this has led to an unprecedented level of interaction among individuals from different continents.

Social and cultural globalization potentially brings various types of innovations that are beneficial to the environment, but it can also lead to new environmental challenges. On the negative side, social and cultural globalization, spread through various forms of global communication technology, tends to deliver messages that support higher levels of consumption. People in other countries are readily adopting these ideas, which often result in negative environmental effects. For example, many environmental problems (e.g., global climate change) will be exacerbated if low-income nations develop their economies in a manner that leads to the same rate of consumption and pollution as is found in high-income nations. On the positive side, increased communication among nations through the direct transfer of ideas and technology, or “technology transfer,” is making international environmental efforts to globalize sustainable technologies a reality for many nations. Technology transfers encourage a new path of sustainable development that has the potential to help reduce poverty in developing nations while at the same time, decreasing or severely limiting the destruction of the environment.13

Governance also may be transformed by social and cultural aspects of globalization. British economist Susan Strange proposes that economic, social, and cultural globalization are leading to the decline of national governmental structures. This “retreat of the state,” according to Strange, has the effect of replacing national governments with other, somewhat different governmental forms and structures (e.g., local governance, global governance, power held by transnational corporations, and the greater influence of international nongovernmental organizations [NGOs]).14 These changes in governance are interacting with recent trends in the globalization of military activity.

Military Globalization
Historically, organized military conquests have served as a form of globalization. This is perhaps the oldest form of globalization, dating back to at least the seventh and eighth centuries, when Arabs from West Asia conquered peoples in Europe and Africa. Expansive examples of intercontinental military conflict include the European conquest of both North America and Latin America (1492 through the late nineteenth century) and World War I, World War II, and the “Cold War” conflicts of the twentieth century. Though the former instigated vast intercontinental change, the latter were in fact the most globalized military conflicts in history, involving large groups of allies comprised of nations from every inhabited continent.

The nature of these wars has led to an increase in the flow of global refugees. The World Wars, for example, caused the flight of many Europeans to the Americas and West Asia. Other conflicts, such as the Kurdish independence movement, have driven many refugees from Asia and Africa into Europe.

War became less globalized during the 1990s, as many conflicts were regionally, rather than globally, focused.15 At first, this decline in military globalism corresponded with a decline in military expenditures, but after the terrorist attacks of 2001, the United States strengthened military bonds with nations around the world in order to fight multinational terrorist networks and this has tended to increase the military expenditures of many nations. Armed forces from several continents formed coalitions to invade Afghanistan in 2001 and Iraq in 2003, citing a need to destroy “global” threats from the al Qaeda terrorist network and weapons of mass destruction. The United States, in an effort to aid the eradication of terrorist cells in other countries, has, since 2001, also provided military aid to many countries, most notably Colombia, Georgia, Israel, and the Philippines.

These developments represent a contemporary globalization trend in military activities and this increase in military globalization has led to higher levels of environmental degradation. For example, US-funded military operations in Colombia spray herbicides over extensive areas in an attempt to destroy the illegal drug crops used to fund guerilla movements. These herbicides damage ecosystems and make all forms of agriculture more difficult for Colombian farmers.

Environmental Globalization
Globalization in economic, social, and military affairs contribute to the fourth process, environmental globalization —the increase of movement between continents of pollutants and species. Of the many environmental challenges found around the world, two in particular are driven by environmental interactions between continents: the loss of biological diversity and the increase of global atmospheric pollution.

Biodiversity
One key aspect of environmental globalization is the decrease in biological diversity. In the past, species distribution has been influenced by three main factors: temperature, geological history, and the structure of the Earth’s surface. Natural barriers (e.g., oceans, seas) have isolated certain terrestrial species in specific areas and terrestrial barriers (e.g., continents) have kept different types of marine species in specific aquatic locations. American biologist Edward O. Wilson describes this type of “geographic speciation” as the process in which populations of plants and animals located in separated regions “diverge from each other in evolution because of the inevitable differences of the environments in which they find themselves.”16

Increased transportation has breached the oceanic barriers that once ensured the biological separation of species. Thousands of exotic species have been introduced to new continents through various means (e.g., biologists transporting these species back to their own countries for study, intentional animal trafficking, and the accidental transport of species through various means of transportation [e.g., ocean-going ships, airplanes, barges, etc.]). Invasive species are non-native species that are brought into an area. These species then compete with the native species already existing in the area. Invasive species can be very destructive, often totally eliminating various indigenous species. Examples of invasive species include: the Nile perch, which has eliminated 200 other fish species in Africa’s Lake Victoria; avian malaria, which has led to the extinction of at least ten native bird species in Hawai’i; and the South American water hyacinth, which has clogged waterways on five continents.17

Global Atmospheric Pollution
The accumulations of greenhouse gases, ozone-depleting chemicals, and nitrogen in the Earth’s atmosphere are not direct results of globalization. Global atmospheric pollution could occur at a rapid rate even if trade, social interactions, and military conflicts decreased. Yet these types of atmospheric pollution are examples of environmental globalization because they require various countries to participate in international agreements in order to effectively reverse the global environmental damage. Nations can address their own soil, water, and localized air pollution problems (e.g., ground ozone, acid rain), but the upper atmosphere is truly a shared, global commons.18 Nations cannot address global climate change, ozone-layer depletion, and nitrogen loading on their own and expect effective results.

All three global atmospheric pollution issues currently rank among the most dangerous environmental threats facing our contemporary global society. Increases in greenhouse gases (e.g., carbon dioxide, methane, nitrous oxide, and ground ozone) are influencing and in some cases altering climate systems while also effectively changing species migration patterns. Damage to the ozone layer is exposing flora and fauna to more dangerous levels of ultraviolet radiation. Nitrogen loading in the atmosphere, through the widespread use of inorganic nitrogen fertilizer, is stimulating higher levels of plant growth, damaging coastal estuaries through eutrophication (harmful algal blooms), polluting drinking water supplies, and enhancing the scale of global climate change.

The pollutants that cause these environmental problems are released from all nations. Atmospheric wind currents quickly circulate the chemicals to all parts of the globe. Analysis of environmental globalization has led many government leaders to the conclusion that global environmental problems require global solutions. Global agreements to address these problems are complicated by the fact that developed nations release much greater levels of pollutants than developing nations.

The effort to protect the ozone layer has been the most successful global environmental project in history. It has involved the cooperation of many international organizations and nearly every national government. Industrialized countries have stopped producing nearly all of the worst ozone-depleting chemicals after signing the Montreal Protocol on Substances that Deplete the Ozone Layer (1987).19

The successful cooperation on the Montreal Protocol gave the United Nations Environmental Programme (UNEP) hope that there could be some agreement on the issue of global climate change. Global climate change has been the subject of intense negotiations since the creation in 1992 of the United Nations Framework Convention on Climate Change (UNFCCC). The 1997 Kyoto Protocol, the first supplement to UNFCCC containing specific emissions goals for various nations, has been ratified by many developed nations in Europe and Asia, but the United States and Australia have rejected the Protocol. The lack of international progress in slowing global climate change illustrates the difficulty of organizing global responses to globally initiated environmental degradation.

The international community has also not yet comprehensively addressed other important issues of environmental globalization, such as invasive species and nitrogen loading. Nations have agreed upon joint commitments for slowing habitat loss to protect biological diversity (e.g., the 1992 Convention on Biological Diversity), but slowing the transport of invasive species to new continents has garnered less attention. Perhaps the relatively recent difficulties in negotiating a limit to greenhouse gases has discouraged any new initiatives to limit nitrogen emissions on a global scale. Interesting regional efforts, however, such as the Gothenburg Protocol to Abate Acidification, Eutrophication, and Ground-level Ozone (1999), are seeking to bring attention to these matters.

Conclusion
As a concept, globalization is too broad to be useful unless it is broken down into at least four interconnected trends—economic globalization, social and cultural globalization, military globalization, and environmental globalization. These trends are often interrelated. Economic globalization has increased the specialization of workers, as their employers compete in global markets. Social and cultural globalization has changed cultures through the increased dissemination of communication, information, and technology. Military globalization has consisted of intercontinental blocs of allied nations engaging in military conflict with terrorists and with each other. Economic, social, cultural, and military globalization have often had negative impacts upon the environment, requiring that all nations of the world cooperate in an effort to slow the process of environmental globalization. Four environmental issues in particular—biodiversity, global climate change, ozone-layer depletion, and nitrogen loading—are either caused by globalization or have serious effects that necessitate global cooperation.

Many scholars, policymakers, and activists consider globalization to be the overarching trend of the post-Cold War world. The nature of international relationships, and the geographic scale of organizations and their power, are certainly related to nearly every type of human activity, from economics and politics to ecology and the arts. Though globalization has been occurring in various ways for thousands of years, the current era is unusual in that globalization has become a primary way of understanding world trends.

The common thread through the many descriptions of globalization is that the world is becoming “smaller.” The four types of globalization interact with one another and can have grave environmental consequences. For example, the economic and social globalization of nineteenth-century imperialism helped facilitate the military and environmental globalization of the twentieth century. As globalization continues, interactions between the four types of globalization are producing possibilities that are even more difficult to analyze and predict than are the situations humans currently face.20

 

Additional Information
For additional information on globalization and trade, consider consulting the resources in our Globalization and Trade Links section.

 

Endnotes
1 Robert O. Keohane, and Joseph S. Nye, Jr., “Introduction” to Governance in a Globalizing World, edited by Joseph S. Nye, Jr., and John D. Donahue (Washington, D.C.: Brookings Institution, 2000) 1, http://www.ksg.harvard.edu/visions/publication/globalizing_intro.doc. Nye is the dean of the John F. Kennedy School of Government at Harvard University.
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2 Ibid.
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3 International Monetary Fund (IMF), World Economic Outlook 2002, (Washington, D.C.: IMF, 2002) 157, 186, http://www.imf.org/external/pubs/ft/weo/2002/01/pdf/annex.pdf. The statistic was created by dividing the value of world output at market exchange rates (p. 157) by the value of world exports (p. 186).
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4 David Held, Anthony McGrew, David Goldblatt, and Jonathan Perraton, Global Transformations: Politics, Economics, and Culture (Stanford, Calif.: Stanford University Press, 1999) 157.
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5 David Ricardo, On the Principles of Political Economy and Taxation, 3d ed. (London: John Murray, Albemarle-Street, 1821), updated n.d., http://www.socsci.mcmaster.ca/~econ/ugcm/3ll3/ricardo/prin/ (cited 5 August 2002).
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6 David C. Korten, The Post-Corporate World: Life After Capitalism (San Francisco, Calif.: Berrett-Koehler, 1999).
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7 Alternatives Task Force of the International Forum on Globalization, Alternatives to Economic Globalization: A Better World is Possible (San Francisco, Calif.: Berrett-Koehler, 2002).
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8 Rajaram Krishnan, Jonathan M. Harris, and Neva R. Goodwin, eds., A Survey of Ecological Economics, Frontier Issues in Economic Thought, vol. 1 (Washington, D.C.: Island Press, 1995).
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9 Fritjof Capra, The Hidden Connections: Integrating the Biological, Cognitive, and Social Dimensions of Life into a Science of Sustainability (New York: Doubleday, 2002).
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10 A “Tobin Tax” is a tax on traded currency. If such a tax were to be instituted, each national government would be responsible for collecting taxable monies whenever any currency was traded in the financial markets. It is proposed that the resulting revenues should be deposited into an international institution, such as the United Nations or the World Bank, to be spent on international social and economic development activities. US Economist James Tobin’s original tax proposal was published in James Tobin, “A Proposal for International Monetary Reform,” Eastern Economic Journal 4, nos. 3–4 (July/October, 1978): 153–59.
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11 Michael Shuman, Going Local: Creating Self-Reliant Communities in a Global Age (New York: Free Press, 1998).
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12 Alternatives Task Force of the International Forum on Globalization, Alternatives to Economic Globalization: A Better World is Possible, 229.
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13 “Sustainable development” has been defined as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” World Commission on Environment and Development, Our Common Future (Oxford: Oxford University Press, 1987).
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14 Susan Strange, The Retreat of the State: The Diffusion of Power in the World Economy (New York: Cambridge University Press, 1996).
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15 Eduardo Viola, “Multidimensionality of Globalization, Environmentalism, and the New Transnational Social Forces,” conference paper, International Studies Association 40th Annual Convention, Washington, D.C., February 16–20, 1999, http://socserv.mcmaster.ca/econ/.
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16 Edward O. Wilson, “The Current State of Biological Diversity,” in Biodiversity, ed. Edward O. Wilson (Washington D. C.: National Academy Press,1988) 6.
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17 Invasive Species Specialist Group, “100 of the World’s Worst Invasive Alien Species: A Selection from the Global Invasive Species Database,” updated n.d., http://www.issg.org/booklet.pdf (cited 7 August 2002).
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18 There are two different types of environmental problems that relate to ozone. One relates to the chemical decomposition of ozone in the stratosphere and the other relates to ozone gases accumulating at a ground level. Depletion of the stratospheric ozone layer occurs through the chemical decomposition of an atmospheric element (ozone) that filters out harmful levels of ultraviolet light emitted by the sun. Stratospheric ozone depletion causes skin cancer and weakens human and animal immune systems. Ground ozone develops locally, primarily around cities, where vehicle emissions have kept levels of nitrogen oxide and reactive organic compounds unusually high. High levels of ground ozone and vehicle emissions have been linked to asthma, cardiac arrhythmia, cardiac arrest, impairment of human reproductive systems, bronchitis, and cancer in humans (Robert J. Pandya, Gina Solomon, Amy Kinner, and John R. Balmes, “Diesel Exhaust and Asthma: Hypotheses and Molecular,” Environmental Health Perspectives Supplements 110, no. 1 [February 2002]: 103–112; Bert Brunekreef and Stephen T. Holgate, “Air Pollution and Health,” Lancet 360, no. 9341 [19 October 2002]: 1233–42.
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19 United Nations Environment Programme, “Synthesis of the 2002 Reports of the Scientific Assessment Panel (SAP), Environmental Effects Assessment Panel (EEAP), and Technology and Economic Assessment Panel (TEAP) of the Montreal Protocol,” UNEP/OzL.Pro/WG.1/23/3 (25 February 2003), http://www.unep.org/ozone/oewg/23oewg/23oewg-3.e.pdf (cited 2 July 2003).
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20 Keohane and Nye, 7.
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