Global Environmental Agreements and Trade Sanctions

Abstract:     
Recent interest in the environment, combined with the recognition that many environmental problems have global consequences, has focused attention on global environmental agreements as a means of controlling for transboundary externalities. An important issue in the formation of these environmental agreements concerns the potential benefits of linking such agreements to international trade agreements as a means of enforcement. This paper demonstrates that strategic incentives for countries to set "weak" environmental standards lessens the need to link environmental agreements to trade agreements. However, such linkage may be beneficial when governments have a strategic incentive to impose "strong" environmental standards.

Keywords: trade agreements, environmental agreements, linkage

JEL Classifications: F13, F18, H2

Working Paper Series