Trade is the essence of the world economy. Radical Changes in the production techniques have resulted in an inter-dependent global economy. Due to globalization the importance of international trade cannot be negated, as countries are interdependent on each other. Most regions of the world depend on supply of resources from other areas. However environmentalists state that liberalisation and globalisation are root causes for environmental destruction around the world. Free trade increases output in the world economy and output would include goods which are domestically prohibited or hazardous in nature the reason is that the world has become capitalistic the only motive is profit making. Governments are owned by these Trans-National Corporations (hereinafter referred as TNCs) and they act the way they are told to by these Capitalists. Liberalisation has given extraordinary bargaining powers to TNCs which they use against the developing world and threaten them to leave their jurisdiction if they do not conform to corporate demands for less environmental regulations.