Abstract
In the context of anti-globalization and trade wars (especially between the US and China), China-ASEAN Free Trade Area (CAFTA) now plays a prominent role in many aspects. In this paper, we investigate how import tariff reduction in CAFTA affects the importers’ pollution emissions, using the firm-level data of Chinese manufacturing from 2002 to 2007. The mechanisms of import tariff reduction in CAFTA on pollution emissions are divided into technique, composition and scale effects. Our results indicate that import tariff reduction in CAFTA on final goods is conductive to importers’ pollution reduction, whereas that on intermediates significantly aggravates importers’ pollution emissions. Moreover, import tariff reduction has heterogeneous impacts on different types of enterprises in terms of industries, ownership, and region. Our results also find that the state-owned importers’ emissions can hardly be affected through technique, composition and scale effects.
Highlights
Benefiting from the globalization and trade liberalization, China has achieved remarkable development by using low-cost factor input in trade
Our analysis shows that tariff on final goods is positively correlated with enterprises’ emissions, which means that import tariff reduction on final goods in China-Association of Southeast Asian Nations (ASEAN) Free Trade Area (CAFTA) will lead to less firms’ pollution emissions
In contrast to our research analyzing the environmental impacts of South-South trade liberalization, the analysis of Cherniwchan [13] studies the effects of an episode of North-South trade liberalization on the emissions of manufacturing firms in North, suggesting that import tariff reduction on intermediates input in North American Free Trade Agreement (NAFTA) reduces the American firms’ emissions
Summary
Benefiting from the globalization and trade liberalization, China has achieved remarkable development by using low-cost factor input in trade. While most of the existing literature focuses on the economic effects of CAFTA [9,14], there is scant evidence proving what impacts CAFTA might have on pollution emissions of firms from China or ASEAN These papers analyze from a macro perspective or an industry perspective. In contrast to our research analyzing the environmental impacts of South-South trade liberalization, the analysis of Cherniwchan [13] studies the effects of an episode of North-South trade liberalization on the emissions of manufacturing firms in North (the U.S.), suggesting that import tariff reduction on intermediates input in NAFTA reduces the American firms’ emissions. We decompose the change of pollution emissions of the firms caused by the tariff reduction on final goods and intermediate inputs into technique, composition and scale effects.
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