This study finds the relationship between trade liberalization and environment by analyzing the impact of freer trade on changes of compositions of production, export, and foreign direct investment using panel data across industries and the time period of 1989-2007. The study separates the results in 2 subperiods namely 1989 to 1995 and 1997 to 2007, deleting the year 1996 when data are not available. The results show that production, exports, and foreign direct investment underwent structural changes after trade liberalization. Furthermore, the changes in production structure coincided with an increase in toxic and water pollution and the compositions of exports and foreign direct investment changed, water pollution increased in all subperiods. This implies that although freer trade led to structural changes and growth of production, exports and foreign direct investment, it might have the side effects of increased pollution.