The GREENTRADE Project
Background
Environmental considerations play an increasingly important role in trade policy. A central question of concern is whether trade and environmental policy are mutually supportive, sharing the same goals, or substitute for each other, with trade adversely affecting the environment or environmental regulations leading to unintended adverse consequences for trade and/or economic welfare. Over the last decades environmental provisions (EPs) have become an integral part of modern bilateral and plurilateral preferential trade agreements (PTAs), mainly in PTAs of developed economies with developing economies. Newly available data sources show that, across PTAs, EPs vary considerably in content and in the degree of enforceability. Research on the impact of EPs on bilateral trade flows remains limited and so far, does not comprehensively account for the heterogeneity of the measures taken.
Objectives
The project focuses on environmental regulations in international trade agreements and addresses the trade-environment nexus from different angles: the impact of EPs in modern preferential trade agreements on overall cross-border trade, on the composition of trade flows as well as on welfare and their impact on CO2 emission levels. We analyse the manufacturing sector, but also investigate the trade-environment nexus in the agricultural sector. We account for the heterogeneity of environmental commitments in PTAs by introducing a new categorisation of environmental provisions according to their legal enforceability, their potential for trade liberalising/trade restricting or climate effects. The methodology combines structural gravity estimation with general equilibrium trade model simulations. Disaggregated sector level analysis is complemented with analyses based on firm-level data provided by the Austrian Micro Data Center.
The Topics
Topic 1: The heterogeneous trade effects of trade agreements with environmental provisions
Last update: June 12, 2024
