No abstract

Environment and trade are increasingly linked through preferential trade agreements. Despite the encompassing nature of environmental provisions in trade agreements, studies on causes and consequences of the trade and environment linkage are scarce. A main cause hindering research in this area is the lack of data. In this research note, we introduce an original data set (TREND) on environmental provisions found in 630 trade agreements signed between 1947 and 2016—the most comprehensive data set in terms of both variables coded and agreements covered. We illustrate the data set’s usefulness by assessing the question of why countries include environmental provisions in trade agreements. Are trade negotiations opportunities to promote stringent environmental standards? Or are environmental provisions window dressing covering protectionist interests? We find evidence that democracies, countries that face import competition, and countries that care about the environment are more likely to include environmental provisions in trade agreements. The database is of particular relevance for research on international institutional design, policy innovation, regime complexity, policy diffusion, and regime effectiveness.

Preferential trade agreements (PTAs) trigger investment through their commitment to a liberal market economy. Increasingly however, PTAs go far beyond liberalizing trade and investment flows. Especially controversial features included in most modern PTAs are environmental and labor standards. Do these standards affect business activity? If so, how do investors react to such non-trade issues in trade deals? The literature provides inconclusive findings about the impact of standards on foreign direct investment (FDI). Some contributors argue that strict standards decrease FDI, whilst others claim that environmental and labor protection increases productivity and, in consequence, inward investment. In all likelihood, the usage of aggregated FDI data, as is the case for most studies, causes confusion. I expect standards to influence investors' decisions -but heterogeneously across sectors. Environmental and labor standards should reduce FDI in polluting and low-skilled labor endowed industries, but increase investment in environmentally clean and high-skilled labor abundant sectors. Based on an original dataset of environmental and social standards in trade agreements and at the sector-level disaggregated US-FDI data, I find robust support for my argument. The paper provides a more nuanced picture on the standards and investment nexus: Standards have no uniform effect on multinationals. Instead, they are good for some, but bad for other industries.

The globalization of production is changing the political economy of trade policymaking: Traditional supporters of free trade (exporters seeking market access in foreign countries) are joined by new actors (companies needing intermediates from abroad for their production processes) in their lobbying efforts for trade liberalization. Multinational corporations (MNCs) play a crucial role in this new alliance due to their strong involvement in international trade and endowment with resources that can be used to lobby policymakers. We derive an argument from these premises that leads to the expectation of variation in trade policy outcomes across industries depending on their degree of integration in a global network of multinational corporations. Disaggregated data on the level of tariffs and speed of tariff cuts in preferential trade agreements, international mergers and acquisitions at the firm level, and MNC imports of intermediates by sector allow us to test the argument. The findings support our theoretical expectations. The paper sheds light on the processes and outcomes of trade policymaking in a globalized economy by further developing an existing argument about GVCs and trade policy outcomes as well as expanding on it by adding data on international corporate connections.

Multilateral negotiations at the World Trade Organization have stalled. This has contributed to a steep rise in preferential trade agreements (PTAs). At the same time, negotiations for PTAs have not always proven quick and painless: While some treaties are sealed within a few months or days only, other agreements are preceded by protracted bargaining processes in trade and trade-related issue areas. In this article, we provide a theoretical explanation for this empirical variation. More specifically, we argue that PTA negotiations take longer the greater the distance between the prospective partners' initial bargaining positions. Moreover, we contend that negotiation processes become more protracted the higher the relative ambition of the prospective PTA. Due to the limited links to the domestic political arena in autocracies, we expect this latter effect to play out for groups of democratic bargaining partners only. We test these two hypotheses for 198 preferential trade negotiations using novel measures for bargaining templates and the ambition of PTA clauses. In our two-stage survival models, we find support for our argument. In line with qualitative evidence from recent preferential trade initiatives, our models indicate that services, investment and intellectual property rights are particularly sticky agenda items for democratic leaders at the international bargaining table.