Impact of Environmental Regulations on Trade in the Main EU Countries: Conflict or Synergy?

In an increasingly integrated world with declining trade barriers, environmental regulations can have a decisive role in shaping countries’ comparative advantages. The conventional wisdom about environmental protection is that it comes at an additional cost on firms imposed by the government, which may erode their global competitiveness. However, this paradigm has been challenged by some analysts. In particular, Porter and van der Linde argue that pollution is often associated with a waste of resources and that more stringent environmental policies can stimulate innovations that may overcompensate for the costs of complying with these policies. This is known as the Porter hypothesis. While there is a broad empirical literature on the impact of trade on environment, the empirical literature on the impact of environmental regulations on trade flows is relatively scarce, very heterogeneous and presents mixed results. The innovative feature of this paper is its attempts to estimate, in a gravity setting, augmented with a proxi of environmental stringency, the impact of three major multilateral environmental agreements (MEAs) on 15 EU countries’ bilateral exports. According to our estimates, in the period 1988–2008, to be member of MEAs had a positive average impact on EU‐15 bilateral exports. This evidence can be partly explained by a possible trade diversion effect with respect to countries that did not sign MEAs and a corresponding trade creation effect among members of the environmental agreements. Furthermore, evidence coming from interaction effects estimates seems to show that for exporting countries, having signed the United Nations Framework Convention on Climate Change and the Montreal agreements partly mitigates (by the amount of the estimated coefficient) the negative impact of having a relatively more stringent environmental regulation on bilateral trade. This result could have important policy implications for the future international trade–environmental negotiations.     

Environmental Regulations in Gravity Equations: Evidence from Europe

One implication of the pollution haven hypothesis is that countries export more by applying more lenient environmental regulations. Most studies that apply gravity‐type equations do not find robust support for environmental regulations to affect bilateral exports. In this paper, we show that one can obtain robust negative effects of stringency, as long as gravity equations are well specified with respect to theory. Our results, based on the European data, are both very consistent with US studies on environmental regulations and another line of very recent studies that infer non‐biased price or substitution elasticities from trade equations. We show that more stringent environmental regulations, when depicting a pure cost effect, are reducing exports. The coefficient is even larger in the case where exporting countries are Central and Eastern European countries, comparing to the EU15. Further, we show that there is no significant difference in the impact of regulations on trade in case of dirty and clean sectors. Finally, when using GMM estimation, our environmental stringency coefficient gets significantly reinforced.     

Induced clean technology adoption and international trade with heterogeneous firms

This paper introduces an environmental externality and factor-biased technology adoption into a trade model with heterogeneous firms. This study explores how firms’ decisions of technology adoption and of exports are affected by openness to trade and the stringency of environmental regulations. It shows that: (1) these decisions induced by tightened environmental policies depend upon whether the upgraded technology is labor-biased or emission-biased; (2) the environmental impact of trade cost reductions on the aggregate emissions and price of emissions permits varies with the factor-biased feature; and (3) regardless of the factor-biased feature, the trade cost reduction induces firms to export and to upgrade the factor-biased technology, while it forces the least productive firms to exit the market. Moreover, the model is further calibrated to simulate policy scenarios of bilateral and unilateral variations in trade variable costs and environmental policies. The bilateral reduction of emissions cap may contribute to welfare gains in both home and foreign countries. The unilateral action of tightening environmental policy in the home country may hurt the home country, but makes the foreign country better off.     

Foreign acquisition and post-privatization exit of state-owned firms

This paper analyzes the impact of foreign and domestic ownership on the exit rates of privatized state-owned enterprises (SOEs) in transitional countries. The exit of privatized SOEs can have a profound impact on employment and on the development of local economies of transitional countries. An oligopoly model that incorporates country-level trade costs and individual SOE's productivity is developed to assess the exit of SOEs under either foreign or domestic ownership. The model shows that market competition between firms can lead to liquidation of the SOE by a domestic firm when trade costs increase. When the productivity of SOE is high, neither foreign nor domestic firm will liquidate. The predictions of the model are tested using firm-level privatization data from Central and Eastern Europe. By controlling for productivity, trade costs, and other attributes of SOEs after privatization, it is found that foreign ownership significantly reduces the probability of SOE's exit as compared to domestic ownership. Furthermore, there is evidence that as trade costs increase, the exit probability of domestically owned SOEs increases and the exit probability of foreign-owned SOEs declines.     

Trade in Services and TFP: The Role of Regulation

What determines total factor productivity (TFP) growth in services: is it services trade or services–trade regulation? To respond to this question, we use four indicators of international trade in services since 1990 to 2005, namely foreign direct investment (FDI) inward stock, services imports, domestic sales of foreign affiliates (FATS) and FDI inflows, to examine what type of services trade forms a direct determinant. Subsequently, we analyse what type of sector‐specific regulation has played an inhibiting effect on services TFP growth. Such analysis contrasts with former studies in which mainly factor inputs and economy‐wide regulation are used to explain services TFP. This paper provides evidence that neither trade nor entry barriers are robust determinants to explain cross‐country differences. Instead, regulations on operational procedures affecting the variables costs structure of the firm seem to play a more important role in explaining TFP growth between countries, particularly in combination with information and communication technology (ICT) capital.     

The Role of Geography in Financial and Economic Integration: A Comparative Analysis of Foreign Direct Investment,Trade and Portfolio Investment Flows

The objective of this paper is to examine the role of geography in explaining the patterns of financial and economic integration among both developed and developing countries. Using a gravity model, we compare North‐North, North‐South and South‐North FDI, trade and portfolio investment flows to examine how geographical factors influence these bilateral flows. The results indicate that the impact of geography variables on FDI and portfolio are similar to their effect on trade. Geography variables have a statistically significant effect both on FDI and portfolio investment, but FDI is more sensitive to distance. We interpret the negative effect of distance as the existence of information costs in financial flows. Also bilateral FDI, trade and portfolio investment flows react to macroeconomic fundamentals in the same way, however, with different degrees of sensitivity. There are significant differences between North‐North and North‐South flows. Our results find support for the argument that most FDI among industrial countries are horizontal, whereas most FDI investment in developing countries is vertical. The fact that the significance of geographical variables on financial flows still remained even after controlling for the macroeconomic fundamentals, is in contrast with the standard capital market model. The results can, however, be reconciled if geographical factors can proxy for information costs, which may in turn explain why country portfolios are still home‐biased. The significant effect of distance on financial flows may also explain how idiosyn cratic shocks are spread (i.e. contagion) to other countries in the same region. Ultimately, the geographical location of a country may determine its economic and financial integration into the world economy.     

Business cycle synchronisation in East Asia: The role of value‐added trade

We empirically investigate the relationship between business cycle synchronisation and the role of value‐added trade focusing on a panel of 12 Asian countries from 1995 to 2011. In addition, we propose the inclusion of two novel determinants, for example external value‐added trade intensity and exchange rate volatility and also saturate our empirical model with other common determinants found in the literature. Our findings first confirm that value‐added trade intensity, rather than gross trade intensity, has a sizable, positive and statistically significant impact on synchronisation among East Asian countries. Second, the exchange rate volatility has a significant negative effect on the business cycle synchronisation, which verifies that the exchange rate volatility is another important determinant of business cycle synchronisation. Our findings have important implications for the monetary cooperation in the region: strengthening trade linkage could reduce the costs of monetary cooperation by increasing the incidence of symmetric shocks.     

环境管制与外商直接投资区位分布——基于城市面板数据的实证研究

文章把环境管制作为主要影响因素,研究了外资企业区位选择的内在机制。利用2003年-2006年我国192个城市的数据,通过建立Panel Data模型,实证研究了环境管制对我国外商直接投资区位分布的影响,结果显示环境管制是我国外商直接投资区位分布不均的原因,环境管制对吸引外商直接投资具有负效应,且这种负效应在中西部地区大于东部地区。     

环境法规对国际贸易的影响:国外研究综述

环境法规对国际贸易的影响综述主要包括以下四个问题:环境法规是否会削弱一国产业的竞争力,环境法规是否会引起污染产业转移到发展中国家,各国不同的环境法规严厉程度是否会引起"生态倾销"以及环境法规与国际贸易之间的协调。文章通过对现有文献的梳理发现:环境法规虽然会对国际贸易的各方面产生负面影响,但是没有得到实证研究的支持。     

Measuring International Trade Costs

The costs of international trade have become an increasingly important item in trade negotiations (under the heading ‘trade facilitation’) and element of trade theory, but definition and measurement of trade costs remain in their infancy. This paper argues that the most conceptually appropriate measure is the gap between cost‐insurance‐freight (cif) and free‐on‐board (fob) values of traded goods, but that this must be measured on a consistent volume of trade. Such data are only available for a few countries. We calculate cif–fob gap values for the three largest trading nations that report such data (Australia, Brazil and the USA). These values provide plausible estimates of ad valorem trade costs for the three importing countries and for all countries’ exports. The estimates indicate that although trade costs have fallen over the last two decades, average trade costs now exceed the average tariff rate on imports into the USA and Australia. Country rankings by the cif–fob gap values differ significantly from those by commonly used proxies for trade costs, such as the indicators of time and cost in the World Bank’s Doing Business database, and analysis based on such proxies is likely to produce misleading results.     

The Trade‐Off between Foreign Direct Investments and Exports: The Role of Multiple Dimensions of Distance

To serve foreign markets, firms can either export or set up a local subsidiary through horizontal foreign direct investment (FDI). The conventional proximity–concentration theory suggests that FDI substitutes for trade if distance between countries is large, while exports become more important if scale economies in production are large. This paper investigates empirically the effect of different dimensions of distance on the choice between exports and FDI. We find that different dimensions of distance affect exports and FDI differently. There is clear evidence of a proximity–concentration trade‐off in geographical terms: the share of FDI sales in total foreign sales increases with geographical distance. The positive relation between import tariffs and FDI intensity provides further evidence for a trade‐off resulting from trade costs. On the other hand, the share of FDI decreases with language differences and cultural and institutional barriers. The latter dimensions of distance thus affect FDI more strongly than exports.     

Brexit and its economic consequences

As the formal process of Brexit has already started, there is much uncertainty about Brexit's impacts on Britain's social, political and economic future. This paper examines the economic impact. After briefly discussing some significant EU treaties that serve as the background materials, it presents the key arguments advocated by the leave and remain camps. The economic impact depends critically on the negotiation outcomes. Aside from the debate on the divorce costs, there are numerous issues that must be negotiated, such as immigration, trade in goods, services, agriculture, fisheries and financial regulations. We discuss various scenarios of possible new trade regimes, resulting in different impacts on the UK economy. With each side having its bargaining chips to play, the trade‐offs between “give and take” in the negotiation game are analysed. Considering various strategic options, this paper urges rationality and cooperation, especially weighing both sides’ entwined economic interests, in addition to their mutual security, defence, environmental and world concerns. The potential gains and losses in the event where the UK contemplates new trade arrangements with the non‐EU countries are analysed in the Appendix .     

Environmental policy and the inward investment position of US “dirty” industries

Do high pollution abatement costs have a disadvantageous effect on foreign direct investment in countries with a strict environmental policy? While it would seem to make sense to believe that they do, hard evidence based on trade data is hard to find. The following article tests the hypothesis for the USA and comes to some surprising conclusions.     

我国出口贸易环境成本内在化效应的实证分析与政策建议

从成本效应角度看,环境成本内在化对我国的出口贸易有负面影响;从创新效应角度看,环境成本内在化对我国出口贸易有正面影响。但综合起来看,创新效应对出口的积极影响弥补了成本效应对出口的消极影响,最终会促进中国出口。既然环境成本内在化有利于实现环境保护与出口增加的双赢,中国应当加强实施环境成本内在化政策,包括进一步提高环境标准、推进自然资源价格改革、改变排污收费政策等。中国实施环境成本内在化的政策应当是经济手段与管制手段并用,但若着眼于未来,应当逐渐转向以经济手段为主。     

Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories

The relationship between trade liberalisation and the environment has been the subject of a growing body of literature in recent years. One particular focus of attention has been whether environmental regulations are influencing patterns of international trade. This paper aims to examine this issue in the context of the Heckscher‐Ohlin‐Vanek (HOV) model of trade, but also in a ‘new’ trade model characterised by monopolistic competition and differentiated products. Our use of the HOV model improves upon a well cited study by Tobey (1990) in many ways, not least by allowing for the possible endogeneity of environmental regulations. We find no significant relationship between such regulations and ‘dirty’ net exports. The ‘new’ trade model explains the presence of both intra‐ and inter‐industry trade and we again allow for the possible endogeneity of regulations. We believe this to be the first study to assess the role of environmental regulations within a ‘new’ trade model, but also the first to allow for the endogeneity of regulations in a cross‐country model of trade. We find environmental regulations to be a statistically significant determinant of the share of inter‐industry trade (net trade) and we find this significance to increase when endogeneity is controlled for.     

产品多样性对RCEP成员出口贸易的影响研究

2020年签署的RCEP是全球规模最大的自由贸易协定,其成员国的要素差异和产品多样性将在一定程度上推进贸易发展。本文利用生物多样性的概念计算2000-2019年RCEP成员国的产品多样性,并建立多元回归模型研究产品多样性对出口贸易的影响。结果表明:产品多样性对出口额有着负向抑制作用,这种抑制作用在非东盟国家更为显著。进一步的分析表明,由于各国专业于生产某类产品,导致产品多样性下降,但专业化又推动出口贸易的发展,从而使两者负相关。基于此,本文提出了创新贸易方式,打造对外贸易新高地,推动产业链价值链合作等促进RCEP成员国贸易发展的对策建议。     

The Asymmetric Effect of Endowments on Vertical Intra‐industrial Trade

(1238) J. Milgram‐Baleix and Ana I. Moro‐Egido This paper investigates the determinants of vertical Spanish intra‐industry trade with developed and developing countries. We empirically test the comparative advantage explanation. To do so, we build physical, human and technological capital stocks. On average, when using OLS techniques, differences in endowments are a limitation for vertical intra‐industry trade. Using quantile regression techniques, we observe that this negative effect decreases in absolute terms as vertical intra‐industry trade flows increase and, in some cases, the impact becomes positive for the upper tails, thus supporting the view of a reduced version of the comparative advantage explanation. Our results provide interesting insights into Spain and emerging countries. A large part of Spanish trade already takes place on an inter‐industry basis or consists of exporting low quality products in exchange for similar products of a higher quality range, in particular with European countries but more surprisingly with emerging countries. Our study shows that high quality exports and horizontal intra‐industry trade are mainly driven by proximities of demand and technological capital while low quality exports share most determinants of inter‐industry trade.     

China and the Trans‐Pacific Partnership: A Numerical Simulation Assessment of the Effects Involved

The Trans‐Pacific Partnership (TPP) is a new negotiation on cross‐border liberalisation of goods and service flows going beyond WTO disciplines and focused on issues such as regulation and border controls. This paper uses numerical simulation methods to assess the potential effects of a TPP agreement on China and also China's inclusion or exclusion on other countries. We use a numerical 11‐country global general equilibrium model with trade costs and inside money. Trade costs are calculated using a method based on gravity equations. TPP barriers potentially removable are trade costs less tariffs. Simulation results reveal that China will be slightly hurt by TPP initiatives in welfare when China is out, but the total production and export will be increased. Other non‐TPP countries will be mostly hurt in welfare, but member countries will mostly gain. If China takes part in TPP, she will significantly gain and increase other TPP countries' gain as well. The comparison of TPP effects and global free trade effects show that the positive effects of global free trade are stronger than TPP effects. Japan's joining TPP would be beneficial to both herself and most of other TPP countries, but which negative effects on China's welfare when out of TPP will increase further.     

反倾销对反倾销实施国的负面效应分析

反倾销使被反倾销企业受到严重损害,通过不公平的法规而征收反倾销税,会严重地影响该项被反倾销的产品的出口,进而影响到该国的就业状况,甚至会影响到该国整个对外贸易或经济的发展。但是,我们却忽视了一点,反倾销的实施未必能给实施国带来预想中的收益,反倾销存在不容忽视的负面效应。实施反倾销必须综合考虑反倾销对象的确定、国内市场的竞争状况、国内相关商品的市场竞争状况以及国内产业状况等一些因素。     

US Economic Sanctions Against China: Who Gets Hurt?

The United States maintains a broad spectrum of economic sanctions against China ranging from export controls to prohibitions on certain imports. Our study finds that, although from a macroeconomic perspective, US sanctions have had no significant adverse effect on China's overall economic growth and trade between the two countries, they do have a negative impact on producers and consumers in both countries. US economic sanctions have hindered technology transfer to China and US investment in China. US restrictions on imports from China have caused deadweight losses for the US due to higher domestic production costs for import substitutes and a reduction in consumption. US export controls have hindered US exports to China and contributed to large US trade deficits with China. The export controls have also caused losses of high‐paid jobs in the United States and benefited competitors from other countries. In addition, US economic sanctions against China have had significant third‐party effects. China's diversification of imports to sources other than the United States may have a long‐term effect on US exports to China even after US economic sanctions against China are lifted.