Boosting trade in environmental goods. Evidence from provisions in free trade agreements

Abstract

Environmentally friendly goods and techniques such are essential for the transition to a greener economy. Trade policy can help support the global diffusion of these goods and technologies by removing barriers to trade, lowering the cost of the green transition for consumers, firms, and governments. This paper investigates the effectiveness of trade agreements that specifically aim to boost and facilitate trade in these environmental goods. Using a gravity model, we find that these trade agreements are not associated with increased trade in environmental goods. Trade flows between countries that have a free trade agreement with so-called environmental goods provisions are not higher than between countries without such an agreement.