Technical Barriers to Trade: A Canadian Perspective on Ecolabelling

Abstract

Ecolabelling is a market-based instrument and an important element of international environmental policies. In our day and age, there is a wide range of ecolabels, which may complicate the decision-making process when looking for the best outcome for consumers and producers. The International Organization for Standardization (ISO) and Global Ecolabelling Network (GEN) suggest a solution to align the various ecolabelling programs. For instance, ISO launched the ISO 14,001 framework, which includes the requirements for Environmental Management Systems (EMSs). The GEN harmonizes international ecolabelling schemes and improves exchanges of information among its country members. This article addresses how unaligned and aligned regulations impact international trade. Consequently, a database including the ISO 14,001 certifications of all countries and containing the exports from 153 countries to Canada from 2001 to 2015 as a dependent variable was created. The remaining variables will serve as independent variables, including gravity variables such as market size, market similarity, distance, and some other core variables such as GEN membership of the exporting country, WTO membership, binding in Free Trade Agreements (FTA) and Mutual Recognition Agreements (MRA) with Canada. Findings show that holding ISO 14,001 certifications has a positive impact on exports to Canada; however, these impacts are not significant enough. Therefore, there is not strong evidence that ISO 14,001 creates barriers to export to Canada. In addition, GEN membership significantly promotes exports to Canada, especially for countries binding in an FTA or MRA with Canada.