Seminar in International Economics: The environmental bias of trade policy (Online event) | 18.03.2021

The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic

The environmental bias of trade policy

Joseph S. Shapiro
(University of California)

Thursday, 18th of March 2021, 3:00 p.m. (CET)

Registration link:
This is an online event via Zoom. Please register for the dial-in link, reminders and e-mail updates. The dial-in link will be sent to you shortly before the event.

The presentation is based on a paper with the same title.

This paper describes a new fact, then analyzes its causes and consequences: in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and so contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little.

The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW, the Centre of Competence in International Economics. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.