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Free Trade Agreements with Environmental Standards

Author

Listed:
  • Hideo Konishi

    (Boston College)

  • Minoru Nakada

    (Nagoya University)

  • Akihisa Shibata

    (Kyoto University)

Abstract
In this paper, we investigate the effects of a free trade agreement (FTA) with environmental standards between Northern and Southern countries, with explicit considerations for transferring clean technology and enforcing reduced emissions. Southern producers benefit greatly from having unimpeded access to a Northern market, but they are reluctant to use new high-cost, clean technology provided by the North. Thus, environmentally conscious Northern countries should design an FTA where Southern countries are provided with sufficient membership benefits but must follow tighter enforcement requirements. Since including too many Southern countries dilutes the benefits of FTA membership, it is in the best interest of the North to limit the number of Southern memberships while strictly enforcing emissions reduction. This may result in unequal treatment among the Southern countries. We provide a quantitative evaluation of FTA policies using a numerical example.

Suggested Citation

  • Hideo Konishi & Minoru Nakada & Akihisa Shibata, 2020. "Free Trade Agreements with Environmental Standards," KIER Working Papers 1026, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1026
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP1026.pdf
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    References listed on IDEAS

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    Cited by:

    1. Christopher M. Dent, 2021. "Trade, Climate and Energy: A New Study on Climate Action through Free Trade Agreements," Energies, MDPI, vol. 14(14), pages 1-30, July.

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    More about this item

    Keywords

    Free trade agreements; Environmental standards;

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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