Trade, Environmental Regulations and the World Trade Organization: New Empirical Evidence

The paper empirically explores the linkages between environmental regulations and international trade flows. So far, empirical studies either have failed to find any close statistical relationship or have delivered questionable results due to data...

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Bibliographic Details
Main Author:	Busse, Matthias
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	ABATEMENT ABATEMENT COSTS ACID RAIN AIR QUALITY ASYMMETRIC INFORMATION CAPITAL GOODS CLIMATE CHANGE COAL COMPARATIVE ADVANTAGE COMPETITIVENESS COMPLIANCE COSTS COST SAVINGS DAMAGES DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DIRECT INVESTMENT DISPUTE RESOLUTION ECONOMIC GROWTH ECONOMIC THEORY ECONOMICS RESEARCH ECONOMISTS EMISSIONS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES ENDANGERED SPECIES ENFORCEABLE PROPERTY RIGHTS ENVIRONMENTAL DEGRADATION ENVIRONMENTAL IMPACT ASSESSMENT ENVIRONMENTAL ISSUES ENVIRONMENTAL LAW ENVIRONMENTAL PROBLEMS ENVIRONMENTAL QUALITY ENVIRONMENTAL REGULATION ENVIRONMENTAL REGULATIONS ENVIRONMENTAL RESOURCES EXTERNALITIES GLOBAL TRADE GLOBAL WARMING IMPORTS INCOME INCOME LEVELS INCOMPLETE MARKETS INTERNATIONAL TRADE IRON LABOR FORCE LAND USE LIVING STANDARDS MARKET FAILURE METALS MULTILATERAL RULES MULTILATERAL TRADING SYSTEM NATIONAL INCOME NATURAL RESOURCES NEGATIVE EXTERNALITIES NET EXPORTS OIL POLLUTION POLLUTION ABATEMENT POLLUTION LEVELS PRODUCERS PRODUCTION COSTS PROPERTY RIGHTS SAVINGS SCALE EFFECT SOCIAL COSTS SUSTAINABLE DEVELOPMENT TOTAL COSTS TRADE BARRIERS TRADE LIBERALIZATION TRADE RESTRICTIONS TREATIES VAN WAGES WORLD TRADE ORGANIZATION WTO TRADE ENVIRONMENTAL STANDARDS GENERAL AGREEMENT ON TARIFFS & TRADE COMPARATIVE ADVANTAGES INTERNATIONAL ECONOMICS WORLD TRADE ORGANISATION
Online Access:	http://documents.worldbank.org/curated/en/2004/07/4986997/trade-environmental-regulations-world-trade-organization-new-empirical-evidence http://hdl.handle.net/10986/14171

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Summary:	The paper empirically explores the linkages between environmental regulations and international trade flows. So far, empirical studies either have failed to find any close statistical relationship or have delivered questionable results due to data limitations. Using a comprehensive new database for environmental regulations across countries, a thorough empirical investigation of that linkage for 119 countries and five high-polluting industries is performed. No evidence is found to support the pollution hypothesis that industries facing above-average abatement costs with environmental regulations would prefer pollution havens and relocate their activities. The exception is iron and steel products, where a negative and statistically significant link is established, implying that higher compliance with international treaties and conventions and more stringent regulations are associated with reduced net exports. High-income countries, where environmental regulations are usually more stringent in comparison to middle or low income countries, have experienced a considerable decline in the export-import ratio of iron and steel products since the late 1970s. There is no clear evidence that national governments choose sub-optimal policies that result in insufficient regulations, so the case for environmental standards within the WTO framework is relatively weak.

Trade, Environmental Regulations and the World Trade Organization: New Empirical Evidence

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