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Tariff Reduction and Environment: Evidence from CAFTA and Chinese Manufacturing Firms

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  • Ling-Yun He

    (College of Economics, & Institute of Resource, Environment and Sustainable Development Research, Jinan University, Guangzhou 510632, China
    School of Business, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Geng Huang

    (College of Economics, & Institute of Resource, Environment and Sustainable Development Research, Jinan University, Guangzhou 510632, China)

Abstract

In the context of anti-globalization and trade wars (especially between the US and China), China-ASEAN Free Trade Area (CAFTA) now plays a prominent role in many aspects. In this paper, we investigate how import tariff reduction in CAFTA affects the importers’ pollution emissions, using the firm-level data of Chinese manufacturing from 2002 to 2007. The mechanisms of import tariff reduction in CAFTA on pollution emissions are divided into technique, composition and scale effects. Our results indicate that import tariff reduction in CAFTA on final goods is conductive to importers’ pollution reduction, whereas that on intermediates significantly aggravates importers’ pollution emissions. Moreover, import tariff reduction has heterogeneous impacts on different types of enterprises in terms of industries, ownership, and region. Our results also find that the state-owned importers’ emissions can hardly be affected through technique, composition and scale effects.

Suggested Citation

  • Ling-Yun He & Geng Huang, 2020. "Tariff Reduction and Environment: Evidence from CAFTA and Chinese Manufacturing Firms," Sustainability, MDPI, vol. 12(5), pages 1-25, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:2017-:d:329151
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