So far, we have known little about the trade effects of environmental provisions in preferential trade agreements (PTAs). Can the trend to incorporate environmental provisions in PTAs help to make trade flows greener? In a new article, we show that environmental provisions can help reduce dirty exports and increase green exports from developing countries. This effect is particularly pronounced in developing countries with stringent environmental regulations. By investigating how environmental provisions in PTAs affect trade flows, the article shows that the design of trade agreements matters. Environmental provisions can be used as targeted policy tools to promote the green transformation and to leverage synergies between the economic and environmental effects of including environmental provisions in trade agreements.
Read our article “Do environmental provisions in trade agreements make exports from developing countries greener?” published in World Development.