Trade agreements and environmental provisions: a counterfactual analysis of environmental impact shifting under global economic inequality

Abstract

Regional trade agreements (RTAs) have proliferated in recent decades, with increasingly stringent environmental clauses aimed at mitigating trade impacts. However, studies on the environmental effects of RTAs typically focus on a few agreements and indicators, hindering a comprehensive understanding of their effects across various resources. Additionally, the long-term effectiveness of environmental provisions within RTAs remains unclear. To address this gap, we applied a rigorous counterfactual analysis to evaluate changes in multiple resource footprints associated with RTAs and environmental provisions across 195 countries annually from 1990 to 2018. We examined four key resources: primary energy, raw materials, blue water, and land use. Findings revealed that RTAs were linked to the outsourcing of environmental footprints across all resource types while reducing footprint insourcing, a phenomenon known as environmental impact shifting. This effect was particularly evident in wealthier countries, where outsourcing of primary energy, primarily from lower-income nations, rose by 11.6%, raw materials by 13.6%, and land use by 33.5%, compared to similar non-RTA countries. Furthermore, these countries’ insourcing of primary energy was reduced by 48.3% and blue water by 15.4% relative to non-RTA counterparts. Environmental provisions within RTAs had limited long-term effectiveness in reducing environmental footprints outsourcing. Global trends show a growing disparity in resource use between wealthy and poor countries, exacerbated by RTAs. Rigorous footprint accounting and a resource-equity mechanism, including ecological premiums for resource-intensive imports, are essential within RTAs. Wealthier nations must adopt more accountable consumption-based governance, prioritising reductions in material consumption to alleviate the socio-ecological impacts on poorer countries.