The EU effect: does trade with the EU reduce CO2 emissions in the developing world?

The European Union (EU) is an important destination for developing country exports. Has the EU’s commitment to the Kyoto Protocol induced developing countries to reduce their carbon dioxide (CO₂) emissions? Our analyses of 136 developing countries from 1981 through 2007 suggests that: developing countries’ export dependence on the EU is associated with CO₂ emission reductions post-Kyoto in relation to the pre-Kyoto time period; this also holds for SO_2, which, while not covered under Kyoto, is linked with CO₂ emission levels; this does not hold for PM₁₀, a pollutant which is not covered under Kyoto and is not directly associated with CO₂ emissions related to industrial activities; developing countries’ export dependence on non-EU developed countries and on the rest of the world is not associated with significant reductions in emissions between pre- and post-Kyoto for these pollutants . In sum, even in the absence of binding regulatory mandates, the EU appears to exert market leverage to project its regulatory preferences abroad.