FIW-Research Report: Wanted! Free Trade Agreements in the Service of Environmental and Climate Protection

Die Auswirkungen des internationalen Handels auf Klima und Umwelt sind vielfältig und komplex. Handelsabkommen kommt dabei eine wesentliche Rolle zu. Die Studie von Julia Grübler, Roman Stöllinger (beide wiiw) und Gabriele Tondl (WU) beschreibt die Entwicklung von Nachhaltigkeitskapiteln in Freihandelsabkommen und erörtert deren Potenziale und Grenzen. Sie hebt wiederkehrende Umweltprobleme im Zusammenhang mit Handel zwischen der EU und Entwicklungsländern hervor und diskutiert politische Handlungsfelder im Hinblick auf die Durchsetzbarkeit von Umweltbestimmungen, die Bepreisung von Umwelteffekten, die Modernisierung der Welthandelsorganisation, und nicht zuletzt den Europäischen Grünen Deal.

Julia Grübler, Roman Stöllinger, Gabriele Tondl
Wanted! Free Trade Agreements in the Service of Environmental and Climate Protection
FIW-Research Report 2021 N° 02
Januar 2021
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Abstract:
The effects of international trade on the planet’s climate and environment are manifold and complex. This makes assessment of the impact of free trade agreements (FTAs) a delicate matter. This study provides an overview of the development of sustainability chapters in FTAs and discusses their potential and limitations. It highlights particular industry-specific environmental issues related to EU trade, especially with developing countries, and presents complementary policy options. In this vein, it zooms in on the EU-Mercosur FTA, for which a political agreement was reached in June 2019. It contrasts the estimated cost of increased CO2 emissions attributable to intensified trade relations, as one element of the ‘pains from trade’, with the estimated ‘gains from trade’ arising from lower prices for consumers. The analysis suggests that the benefits outweigh the costs; yet, the result is sensitive to assumed prices for pollutants. Furthermore, the effectiveness of the incorporated sustainability chapter is limited by its enforceability. The latter provokes a discussion on the modernisation of the framework of the World Trade Organization, which currently does not allow environmental challenges to be tackled effectively.