Linking trade and environment in emerging economies: Korea’s ambition for making green free trade agreements

Abstract

In trade negotiations, developed countries have been frontrunners in advocating environmental protection whereas developing countries were reluctant to link environmental protection to their trade agreements. However, the recent trend of including environmental provisions (EPs) in free trade agreements (FTAs) shows a policy change in some of the emerging economies. Not only did they adopt EPs but they also actively introduced a comprehensive set of EPs – environmental chapters. Using the Republic of Korea (Korea)’s FTAs, this study explores why emerging economies come to include environmental chapters in their FTAs. Existing studies have offered explanations focusing on domestic politics. Yet, they do not specify the impact of the interaction between domestic and international politics. Through the lens of the two-level games, this study finds that the combination of domestic and international pressures plays an important role in making green FTAs. First, Korea has been pursuing environmental leadership at the world stage during the Korea-US FTA (KORUS) negotiation. Against this background, the US’ proposal to include an environmental chapter has reverberated within domestic politics. Second, the costs of implementing this environmental chapter were low. After the KORUS, Korea has been including similar environmental chapters because these chapters were cost-effective ways to promote its enduring environmental leadership. This finding has far-reaching implications for facilitating emerging economies’ green FTAs.