The Potential Impact of Environmental Goods Trade Liberalization on Trade and Emissions

37 Pages Posted: 21 Dec 2023

See all articles by Enxhi Tresa

Enxhi Tresa

affiliation not provided to SSRN

Marc Bacchetta

World Bank; World Trade Organization (WTO) - Economic Research and Analysis Division

Eddy Bekkers

World Trade Organization (WTO)

Jean-Marc Solleder

University of Geneva

Abstract

We combine econometric estimation with quantitative modelling to generate projections on the trade, GDP, and emissions effects of a potential trade liberalization agreement in energy related environmental goods (EREGs) and environmentally preferable products (EPPs). Trade liberalization can contribute to reduced emissions in two ways in our projections: (i) a reduction of import prices of goods promoting energy efficiency; (ii) a reduction in the costs of intermediate and capital goods used in the production of electricity from renewable sources. We evaluate four scenarios combining reductions in tariffs and non-tariff measures (NTMs) of EREGs and EPPs. Using simulations with the WTO Global Trade Model findings show (i) an increase in exports of EREGs and EPPs both at the global level and in most regions; (ii) a modest increase in GDP in all regions because of falling tariffs, NTMs, and increased energy efficiency; (iii) a modest reduction in global emissions of about 0.6%. The dominant channel is energy efficiency whereas the costs of EREGs as intermediates in renewable energy production play a minor role, with or without end use control.

Keywords: Environmental Goods (EGs), Trade Liberalization, Emissions, Energy ef-
ficiency

Suggested Citation

Tresa, Enxhi and Bacchetta, Marc and Bacchetta, Marc and Bekkers, Eddy and Solleder, Jean-Marc, The Potential Impact of Environmental Goods Trade Liberalization on Trade and Emissions. Available at SSRN: https://ssrn.com/abstract=4672362 or http://dx.doi.org/10.2139/ssrn.4672362

Enxhi Tresa

affiliation not provided to SSRN

Marc Bacchetta

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland

Eddy Bekkers (Contact Author)

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

Jean-Marc Solleder

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

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