An Analysis of Environmental Provisions in Preferential Trade Agreements: Interdependence, Diffusion, and Trade Effects

Concerns about the environment and climate change have grown steadily over the years. These concerns have sparked greater interest in the potential impact of international trade on the environment, and in whether stronger regulation is needed to contain that impact. Concurrently, globalization has tremendously increased trade exchanges between countries over the past years. To facilitate trade relations, countries have signed more and more Preferential Trade Agreements (PTAs). These agreements no longer only include information about trade issues, but also include information on a wider set of issues, protection of the environment being one of them. Environmental protection in PTAs has evolved through the inclusion of an increasingly wide range of environmental provisions.
This dissertation examines the presence of environmental provisions in PTAs, with a focus on three main aspects: interdependence, diffusion, and trade effects. It first explores what explains the adoption of environmental provisions in PTAs and whether there is interdependence between countries. Then, it attempts to understand how environmental provisions diffuse from country to country. Furthermore, this dissertation touches on the topic of the effectiveness of these provisions with respect to trade flows by examining, as a case study, the exports of Belgian firms. Through this examination, the aim is to gain a deeper understanding of the real impact of environmental provisions on trade flows.
This dissertation suggests that countries may use trade, and exports in particular, as a means to impose certain environmental provisions on other countries. In this way, some countries use trade to achieve non-trade objectives. Moreover, European countries are found to be the main transmitters of these environmental provisions. Finally, incorporating such environmental provisions into PTAs could raise the costs associated with accessing a given export market, and, in turn, influence firms' export behavior.