Abstract
Regional trade agreements (RTAs) have been widely adopted to facilitate international trade and cross-border investment and promote economic development. However, ex ante measurements of the environmental effects of RTAs to date have not been well conducted. Here, we estimate the CO2 emissions burdens of the Regional Comprehensive Economic Partnership (RCEP) after evaluating its economic effects. We find that trade among RCEP member countries will increase significantly and economic output will expand with the reduction of regional tariffs. However, the results show that complete tariff elimination among RCEP members would increase the yearly global CO2 emissions from fuel combustion by about 3.1%, doubling the annual average growth rate of global CO2 emissions in the last decade. The emissions in some developing members will surge. In the longer run, the burdens can be lessened to some extent by the technological spillover effects of deeper trade liberalization. We stress that technological advancement and more effective climate policies are urgently required to avoid undermining international efforts to reduce global emissions.
Highlights
Regional trade agreements (RTAs) have been widely adopted to facilitate international trade and cross-border investment and promote economic development
We evaluate how and to what extent trade and welfare are affected by tariff reductions committed in the Regional Comprehensive Economic Partnership (RCEP) Agreement
The results show that trade changes in the case of all trade in goods within the RCEP bloc becoming duty-free would increase CO2 emissions for China, the ASEAN countries, South Korea, Japan, Australia, and New Zealand by 130.2 million tonnes (Mt), 70.4 Mt, 27.2 Mt, 22.5 Mt, 4.8 Mt, and 0.5 Mt, respectively
Summary
Regional trade agreements (RTAs) have been widely adopted to facilitate international trade and cross-border investment and promote economic development. We estimate the CO2 emissions burdens of the Regional Comprehensive Economic Partnership (RCEP) after evaluating its economic effects. We find that trade among RCEP member countries will increase significantly and economic output will expand with the reduction of regional tariffs. The results show that complete tariff elimination among RCEP members would increase the yearly global CO2 emissions from fuel combustion by about 3.1%, doubling the annual average growth rate of global CO2 emissions in the last decade. International trade increases global or regional emissions if developed economies with cleaner production technology and more stringent environmental policies transfer their polluting industries or production activities to developing countries, leading to emission leakages. The learningby-doing effects of deeper trade integration reduce the emission intensity and thereby lessen the emission burdens to some extent
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