An assessment of China-Japan-Korea Free Trade Agreement’s economic and environmental impacts on China

Recently, China, Japan, and the Republic of Korea (Korea) are conducting a government-commissioned feasibility study on the Free Trade Agreement among the three countries (CJKFTA) to form a regional free trade zone in East Asia. Considering that freer trade can cause unexpected impact on domestic environment, there is a need to evaluate the environmental impact of such a trade policy. This move should be made to help negotiators understand and pay more attention to environmental issues during CJKFTA negotiations, and to help lobby with the government to carry out appropriate policy instruments for adaptation or mitigation. Following the Chain Reaction Assessment Method that integrates and links the elements of trade, production, and environment, the present research aims to quantitatively assess CJKFTA’s possible impact on China’s environment. This is done by estimating the variations of China’s major conventional pollutants and greenhouse gases (GHGs) emission in two policy scenarios to represent CJKFTA’s scale and composition effects on China’s environment. Estimating the variations is based on a static Computable General Equilibrium model, working with Global Trade Analysis Project (GTAP) 7 database and China’s energy-environment statistics. Based on these assessments, CJKFTA is predicted to lead to notable environmental impact, including increased emissions of agricultural total nitrogen, agricultural total phosphorus, chemical oxygen demand, and GHGs. On the other hand, decreased emissions of industrial SO₂ and dust are also expected to happen. Suitable policies need to be made to combat negative effects and amplify positive ones, while aiming at a more sustainable regional freer trade system.     

Environmental Policy and International Trade when Governments and Producers Act Strategically

Some environmentalists express concern that trade liberalization may damage the environment by giving governments incentives to relax environmental policies to give domestic producers a competitive advantage. Support for such concern may be given by models of imperfectly competitive trade where there may be “rent-shifting” incentives for governments to relax environmental policies. But there are also incentives for producers to act strategically, e.g., through their investment in R&D, and in this paper I extend the literature on strategic environmental policy by allowing for strategic behavior by producers as well as governments. I show that (i) allowing for producers to act strategically on balance reduces the incentive for governments to act strategically; (ii) allowing governments to act strategically increases the incentive for producers to act strategically; (iii) welfare is lower when both parties act strategically; and (iv) strategic behavior by producers and governments is greater when governments use emission taxes than when they use emission standards.     

Fair trade as a strategy for international competitiveness

At the centre of the debate surrounding sustainable development is a recognition that companies can make a major contribution by being environmentally and socially responsible and that tools associated with these concepts can enhance the competitiveness and economic performance of the firm. In this paper we go further in arguing that in a world of globalisation it is equally important to look at issues of international trade.

In an examination of free trade we argue that it is neither fully consistent with sustainable development nor to the benefit of business. We point to a new imperative to develop sound sourcing, and equitable and fair trading relationships. We identify issues associated with fair trade (including issues of human rights, fair wages, sustainability reporting procedures and codes of conduct on ethics) and associated tools of analysis (guaranteed prices, codes of conduct and end price audits).

The paper argues that in a world of globalisation with greater transparency and information availability it will be important for companies to be clear about their policies on supply chain management and trade. Indeed, with the growth of an active and sophisticated civil society, it will be argued that policies associated with sound sourcing, equitable trade and fair trade could provide companies with a new competitive strategy based on ethical standards communicated to the consumer through a strategy of differentiation. We explore strategies for the integration of fair trade policies, strategies and standards, and the opportunities for new markets and niches that this presents. It is argued that the integration of fair trade into a business strategy can enhance competitiveness.     

Achieving environmental goals in a world of trade and hidden action: the role of trade policies and eco-labeling

Importing countries often resort to trade policies and consumer actions in order to reduce negative environmental impacts of the products they consume. Traditionally, these policies were non-discriminatory, i.e., they treated all imports equally, without considering the actual damages caused by the product. More recently, there is a trend towards process-discriminatory policies which attempt to discriminate against environmentally unsound imports while encouraging sound alternatives. We develop a theoretical model of the consuming country's optimal trade policy, allowing for asymmetric information and costly monitoring, and analyze what type of policy is preferable under what conditions.     

Climate and international trade policies when emissions affect production possibilities

In this paper, we develop a model of international trade and climate change in which emission discharges arising from production have a feedback effect on national production sectors by impacting upon effective factor endowments. With this context, the objectives are, first, to provide a general characterization of Pareto-efficient climate and trade policies and, second, to examine the possibility – starting from non-Pareto-efficient equilibria – for Pareto-improving environmental policies. We provide conditions under which several particular reforms of carbon taxes are welfare improving.     

Local‐Scale Dynamics and Local Drivers of Bushmeat Trade

Bushmeat management policies are often developed outside the communities in which they are to be implemented. These policies are also routinely designed to be applied uniformly across communities with little regard for variation in social or ecological conditions. We used fuzzy‐logic cognitive mapping, a form of participatory modeling, to compare the assumptions driving externally generated bushmeat management policies with perceptions of bushmeat trade dynamics collected from local community members who admitted to being recently engaged in bushmeat trading (e.g., hunters, sellers, consumers). Data were collected during 9 workshops in 4 Tanzanian villages bordering Serengeti National Park. Specifically, we evaluated 9 community‐generated models for the presence of the central factors that comprise and drive the bushmeat trade and whether or not models included the same core concepts, relationships, and logical chains of reasoning on which bushmeat conservation policies are commonly based. Across local communities, there was agreement about the most central factors important to understanding the bushmeat trade (e.g., animal recruitment, low income, and scarcity of food crops). These matched policy assumptions. However, the factors perceived to drive social‐ecological bushmeat trade dynamics were more diverse and varied considerably across communities (e.g., presence or absence of collaborative law enforcement, increasing human population, market demand, cultural preference). Sensitive conservation issues, such as the bushmeat trade, that require cooperation between communities and outside conservation organizations can benefit from participatory modeling approaches that make local‐scale dynamics and conservation policy assumptions explicit. Further, communities’ and conservation organizations’ perceptions need to be aligned. This can improve success by allowing context appropriate policies to be developed, monitored, and appropriately adapted as new evidence is generated. Dinámicas a Escala Local y Conductores Locales del Mercado de Carne de Caza     

The case for international emission trade in the absence of cooperative climate policy

We evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self-interest. To do so, we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies. Countries’ decisions about their participation in a trading system and about their initial permit endowment are made non-cooperatively; so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains. Despite this, we find that emission trade agreements can be effective; that smaller groupings pairing developing and developed-world partners often perform better than agreements with larger rosters; and that general equilibrium responses play an important role in shaping these outcomes.     

The case for international emission trade in the absence of cooperative climate policy

We evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self-interest. To do so, we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies. Countries’ decisions about their participation in a trading system and about their initial permit endowment are made non-cooperatively; so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains. Despite this, we find that emission trade agreements can be effective; that smaller groupings pairing developing and developed-world partners often perform better than agreements with larger rosters; and that general equilibrium responses play an important role in shaping these outcomes.     

Trading rules and the environment: Does equal treatment lead to a cleaner world?

In this paper, we consider a three-stage game in the context of a competing exporters model to compare and contrast the effects of discriminatory and uniform (Most Favored Nation, MFN) tariffs on countries’ choice over environmental standards for varying degrees of pollution spillovers. Because of the presence of punishment effects and stronger own and cross-tariff effects, we find that discrimination yields higher standards than MFN (and free trade) independently of the extent of pollution spillovers. When pollution is local and incentives to free ride on other countries’ abatement efforts are weak, we show, however, that welfare is larger under MFN than under discrimination. In a dynamic setting, we consider the impact of symmetric and asymmetric treatments on the sustainability of an international environmental agreement (IEA) and obtain that multilateral cooperation is easier to sustain under discrimination than under MFN (or free trade).     

Trade and Environment: An Empirical Analysis of the Technology Effect in the Steel Industry

The objective of this paper is to study the impact of free trade on global environmental quality by focusing on the technology effect, that is, the relationship between trade openness and the adoption/diffusion of clean technologies. The paper attempts to empirically verify the existence of the technology effect by looking at the relationship between trade policy regime, or openness, and the speed of clean technology diffusion in the steel industry. Focusing on a cleaner steel technology, the electric arc furnace (EAF), in 30 steel-producing countries over 25 years, the results show that EAF technology is diffused faster in countries that have more open trade policy regimes, thereby supporting the existence of the technology effect for the industry considered.     

Quantitative analysis of CO2 embodiment in international trade: An overview of emerging literatures

The increasing volume of CO₂ embodiment in international trade adds a layer of complexity to environmental policies and has raised arguments on the traditional production based responsibility for CO₂ emissions. In order to help understand the quantity of CO₂ embodiment in trade and its policy implications, this paper gives observations to recently emerging literatures that quantitatively discuss CO₂ embodiment in trade. The analytical approaches share the principle of using input and output modeling but vary dramatically in study boundary and estimation accuracy. The calculations can be roughly categorized into three types: direct quantification of CO₂ embodiments in multiregional trade, direct quantification of CO₂ embodiment in bilateral trade, and indirect analysis by comparing the scenarios with or without trade. The practical estimations strongly rely on trade partner selection and data availability. An obvious imbalance of net CO₂ embodiment in the commodity trade between major developed countries and developing economies as a whole was confirmed by these literatures. Carbon taxes and other possible limitations on CO₂ emissions have been addressed. The consistency across the calculations could be enhanced by systematic analyses in more detail to convince the international community to take binding commitments for the reduction of global CO₂ emissions.     

中国消耗臭氧层物质非法进出口贸易状况和对策分析

分析了我国在保护臭氧层工作中在进出口贸易方面存在的问题,重点分析了消耗臭氧层物质（ODS）非法贸易的形式,尤其是ODS作为制冷剂的非法贸易形式,论述了ODS非法贸易工作的防范重点。同时,分析了非法贸易产生的主要原因,阐述了我国控制ODS非法贸易的措施和成效,以及非法贸易对我国履行环境国际公约工作的危害。最后,就强化ODS进出口管理、减少杜绝ODS非法贸易提出工具体的对策建议：调整氟化工行业产品的出口退税率,加强打击“三非”能力和ODS进出口管理机构建设。     

On the environmental consequences of intra-industry trade

In the trade and environment debate, the relevance of examining the impact of a location's intra-industry trade (IIT) on environmental quality cannot be overemphasized, in part, due to the increasing prominence of such trade and the paucity of related empirical evidence. Although existing studies largely indicate overall trade to be pro-environment, the consequences of IIT may differ owing to greater varieties of intermediate and final goods, easier technology diffusion via trade in similar goods, productivity gains from within-sector reallocations, and increased innovation. However, identification of the causal effect is plagued by the potential endogeneity of IIT attributable to crucial unobservables and measurement error. In this light, utilizing an instrumental variables strategy and data on multiple environmental indicators from roughly 200 countries over 2000-2005, we investigate IIT's impact on the environment. To measure IIT, we rely on two indexes of within-industry specialization based on changes in and levels of sector-level trade. Regardless of the indicator of IIT or environmental performance, across several sets of instruments, we mostly find (i) IIT to benefit the environment, (ii) overall trade to be less pro-environment than IIT, and (iii) concerns over endogeneity to be relevant.     

Can a water market avert the “double-whammy” of trade reform and lead to a “win–win” outcome?

This paper focuses on the linkages between water and trade policies, using Morocco as a case. This country is typical of many in that policy protects its import competing agricultural and industrial sectors while water in irrigated agriculture is priced below its marginal value product. Changing water policy without correcting for these other distortions leads to a more inefficient allocation of water. On the other hand, reforming trade policy alone can make farmers growing crops protected pre-reform worse off. Using an intertemporal, applied general equilibrium model, we find that trade reform actually creates an opportunity to pursue water policy reform. Creating a water user-rights market post trade reform not only compensates for the decline in farmers’ profits caused by the trade reform, but also raises the efficiency of water allocation and hence benefits the economy as a whole.     

Preferred conservation policies of shark researchers

There is increasing concern about the conservation status of sharks. However, the presence of numerous different (and potentially mutually exclusive) policies complicates management implementation and public understanding of the process. We distributed an online survey to members of the largest professional shark and ray research societies to assess member knowledge of and attitudes toward different conservation policies. Questions covered society member opinions on conservation and management policies, personal histories of involvement in advocacy and management, and perceptions of the approach of conservation nongovernmental organizations (NGOs) to shark conservation. One hundred and two surveys were completed (overall response rate 21%). Respondents considered themselves knowledgeable about and actively involved in conservation and management policy; a majority believed scientists have a responsibility to advocate for conservation (75%), and majorities have sent formal public comments to policymakers (54%) and included policy suggestions in their papers (53%). They believe sustainable shark fisheries are possible, are currently happening today (in a few places), and should be the goal instead of banning fisheries. Respondents were generally less supportive of newer limit‐based (i.e., policies that ban exploitation entirely without a species‐specific focus) conservation policy tools, such as shark sanctuaries and bans on the sale of shark fins, than of target‐based fisheries management tools (i.e., policies that allow for sustainable harvest of species whose populations can withstand it), such as fishing quotas. Respondents were generally supportive of environmental NGO efforts to conserve sharks but raised concerns about some NGOs that they perceived as using incorrect information and focusing on the wrong problems. Our results show there is an ongoing debate in shark conservation and management circles relative to environmental policy on target‐based natural resources management tools versus limit‐based conservation tools. They also suggest that closer communication between the scientific and environmental NGO communities may be needed to recognize and reconcile differing values and objectives between these groups.     

Corruption, political competition and environmental policy

This paper examines the interplay between corruption, political competition, environmental policy and environmental outcomes. An important feature of the model, which has been neglected in the existing literature, is that corruption may occur at different levels of government, such as the payment of bribes to politicians who determine policies, or bureaucrats who administer environmental regulations. We analyse the relationship between political competition and environmental outcomes in a model of stratified corruption and identify the benefits and limits of political competition. Our results suggest that while political competition may yield policy improvements, it cannot eliminate corruption at all levels of government.     

Are politicians office or policy motivated? The case of U.S. governors' environmental policies

Are elected politicians primarily motivated by holding office, thus choosing environmental policies accordingly? Or are they motivated by the chance to implement their preferred environmental policies? Do governors have character, in the sense that they promise and implement environmental policies consistent with their own preferences? To answer these questions, we study the differences in environmental spending across both re-electable and lame duck governors from the two main political parties. In our empirical analysis, we make use of parametric and non-parametric regression-discontinuity approaches. While re-electable governors do not set significantly different policies, lame duck governors do. We argue that in the area of environmental policy governors appear to be primarily office motivated and lack character.     

Double-dipping in environmental markets

There is an increasing tendency to use markets to induce the provision of environmental services. As such markets increase in scope, potential market participants might sell multiple environmental services. The question we consider here is whether participants in such markets should be allowed to sell credits in more than one market simultaneously. Some have argued in favor of such “double-dipping”, because it would make the provision of environmental services more profitable. In practice however, most programs do not allow double-dipping. We show that if the optimal level of pollution abatement is sought, then double-dipping maximizes societal net benefits. However, if pollution policies are set in a piecemeal fashion, then the caps for each market are unlikely to be optimal and, in this second-best setting, a policy prohibiting double-dipping can lead to greater social net benefits. We explore conditions under which a single-market policy is preferred, or equivalently, where piecemeal policies are likely to yield particularly inefficient outcomes.     

The costs of avoiding environmental impacts from shale‐gas surface infrastructure

Growing energy demand has increased the need to manage conflicts between energy production and the environment. As an example, shale‐gas extraction requires substantial surface infrastructure, which fragments habitats, erodes soils, degrades freshwater systems, and displaces rare species. Strategic planning of shale‐gas infrastructure can reduce trade‐offs between economic and environmental objectives, but the specific nature of these trade‐offs is not known. We estimated the cost of avoiding impacts from land‐use change on forests, wetlands, rare species, and streams from shale‐energy development within leaseholds. We created software for optimally siting shale‐gas surface infrastructure to minimize its environmental impacts at reasonable construction cost. We visually assessed sites before infrastructure optimization to test whether such inspection could be used to predict whether impacts could be avoided at the site. On average, up to 38% of aggregate environmental impacts of infrastructure could be avoided for 20% greater development costs by spatially optimizing infrastructure. However, we found trade‐offs between environmental impacts and costs among sites. In visual inspections, we often distinguished between sites that could be developed to avoid impacts at relatively low cost (29%) and those that could not (20%). Reductions in a metric of aggregate environmental impact could be largely attributed to potential displacement of rare species, sedimentation, and forest fragmentation. Planners and regulators can estimate and use heterogeneous trade‐offs among development sites to create industry‐wide improvements in environmental performance and do so at reasonable costs by, for example, leveraging low‐cost avoidance of impacts at some sites to offset others. This could require substantial effort, but the results and software we provide can facilitate the process.     

边境贸易发展的环境影响预测及其调控研究——以满洲里市为例

边镜贸易作为我国作为开放的重要组成部分，进展显著。本文在概述我国边境贸易发展所产生的环境问题的基础上，以我国最大的陆边口岸－－满州里市为例，运用灰色预测，动态规划等方法探讨边境贸易与环境保护协调发展的途径。