Environmental provisions in trade agreements: defending regulatory space or pursuing offensive interests?

Abstract

The increasing uptake of environmental provisions in preferential trade agreements (PTAs) is well documented, but little is known about why countries prefer certain types of provisions over others. This contribution exploits a fine-grained dataset on environmental provisions in PTAs and hypothesizes that environmental provisions are more likely to be adopted when they aim at preserving countries' regulatory sovereignty. It finds that the likelihood of adoption is indeed higher for defensive provisions, but this likelihood decreases if there is a large variation in PTA members' stringency of environmental regulations, and in particular, for PTAs with asymmetric power relationships. The results suggest that, while countries first and foremost attempt to preserve their regulatory sovereignty when adopting environmental provisions, countries with stringent environmental regulations and strong bargaining power vis-à-vis their trading partners also try to level the playing field and pursue more offensive interests.

Defensive Issue Linkage: Exploring the Origins of Environmental Content in Trade Agreements

“…Environmentalists' pressure also resulted in the emergence of environmental provisions in preferential trade agreements. Some of these serve as direct carve-outs for environmental policies, but we also observe more proactive clauses that attempt to improve environmental conditions in treaty partners (Blümer, Morin, Brandi, & Berger, 2020). I argue that such proactive clauses are not the primary reason for environmentalists' mobilization around trade.…”

“…Others uphold the legal prevalence of existing MEAs or explicitly reinforce members' right to adopt standards that are more stringent than international ones. Other clauses are more proactive, mandating, for example, that countries have to continually improve their environmental regulations (Blümer et al, 2020). Both kinds of clauses may arise through a "defensive" mechanism.…”

Do Greener Trade Agreements Call for Side-Payments?

“…In fact, certain types of environmental provisions could be more important to high-income countries and met with stronger resistance from developing countries. Some of these highly contentious provisions are "defensive environmental provisions" (Blümer et al, 2020). Defensive provisions are those that are used to safeguard a country's policy space for environmental regulations.…”

“…Notably, some developing countries are reluctant to include certain environmental provisions in their PTAs for fear that these provisions might restrict their exports and limit their economic growth (Draper et al, 2017). By contrast, high-income countries, often equipped with higher domestic environmental standards, insist on promoting their own environmental standards in their trade agreements with developing countries (Blümer et al, 2020). Since foreign aid operates as a side-payment in various policy fields (Alesina & Dollar, 2000; Baccini & Urpelainen, 2012; Dreher et al, 2008; Kuziemko & Werker, 2006), we hypothesize that one attractive solution is to raise development assistance to increasing acceptance of environmental provisions in PTAs.…”

Taking it seriously: commitments to the environment in South-South preferential trade agreements

“…Independent of whether these clauses are included because of genuine environmental concern (Jinnah 2011, Jinnah andLindsay 2016) or to protect domestic industries in industrialized countries from (unfair) competition based on low standards of production (Mosley andUno 2007, Lechner 2016), both arguments share the assumption that the impetus for including environmental provisions in PTAs stems from the highly regulated North. The nascent literature on environmental provisions in trade agreements and their effect on the natural environment tends to share this assumption (e.g., Jinnah andLindsay 2016, Brandi et al 2019), as does the literature focusing on the reasons why and which particular environmental provisions are included in PTAs and how they diffuse from one PTA to another (Morin et al 2019, Blümer et al 2020. Hence, the literature to date has a strong focus on perceiving these clauses as something desired by industrialized countries and (reluctantly) agreed to by developing countries in exchange for market access Potoski 2006, Bastiaens andPostnikov 2017).…”