Effects of environmental provisions in international trade agreements on businesses and economies – a systematic review

Abstract

Purpose International trade and its effects on the environment are increasingly discussed both in academia and by policymakers. To counter negative effects of international trade on the environment, so called environmental provisions have been integrated in trade agreements aimed at businesses and economies. However, as both the intent and effectiveness of these provisions are controversial, this paper aims to provide an overview of the current state of research and identified key factors influencing their effectiveness. Design/methodology/approach The authors conduct a systematic literature review of 44 papers on the effects of environmental provisions in international trade agreements on the environmental performance of businesses, as well as economies from 1992 to mid-2024. Findings The integration of environmental provisions into trade agreements generally has positive effects on the environment while their effectiveness is influenced by their design and several boundary conditions. Alongside the importance of effective enforcement mechanisms, reputation concerns of businesses and lobbyism are discussed as intermediary factors in the design and impact of environmental provisions. Practical implications The insights can benefit policymakers to optimize future environmental provisions and advance the effectiveness of policies aimed at balancing the effects of trade liberalization with environmental protection. Social implications Social sustainability is increasingly relevant for creating more sustainable trade policy while societal mechanisms seem to be an adequate tool to ensure effective enforcement of ecological provisions. Originality/value To the best of the authors’ knowledge, this review is the first of its kind to provide a systematic overview of the literature on the effectiveness of environmental provisions that combines the micro-level of businesses and macro-level of economies, although the importance for trade in general and environmental protection, in particular, has been recognized in the academic literature.