Trade distorting practices can have a potentially damaging impact on the environment, according to a report by the World Wide Fund for Nature (WWF).

"Current world market prices, patterns of trade, trade policies, and multilateral trade agreements, lead to unsustainable pressure on the environment," said the WWF study "South-North terms of trade, Environmental Protection and Sustainable Development," released Wednesday.Many of the trade-related environmental problems stem from the inability of governments to grasp the "full environmental costs incurred in the extraction, production, transport, use, and recycling or disposal of traded goods," it said.

To redress the situation WWF proposes adopting on a global scale a ''polluter pays" system in which industry pays its own environmental costs at each stage, eventually passing these external costs on to the consumer.

the report noted, however, that producers who absorbed their costs "have a legitimate desire to ensure that others do not gain a short-term" advantage on domestic or world markets by externalizing their costs.

The report said many developing nations fear the rise of "green protectionism" in industrialized countries, wherein imports would be blocked

from poorer countries that cannot afford enviroment-sensitive production programs. It is unlikely that these nations would be able to absorb environmental costs without the assistance of the wealthier, industrial countries, the report concluded.

One way to help developing countries fight the environmentally harmful effects of production would be to repatriate import tariffs levied on products

from such countries if those products are not priced to reflect the full environmental costs of production. These funds could then be used for clean up or for the development of more environmentally friendly production processes.

Another way would be to create an international environment fund to assist developing countries, the report suggested.