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Multilateral Environmental Agreements and Trade Obligations: A Theoretical Analysis of the Doha Proposal

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  • Alireza Naghavi

    (PSE, Ecole Normale Supèrieure)

Abstract

The Doha declaration on trade and environment proposed to clarify the relationship between multilateral environmental agreement (MEA) trade obligations and WTO rules by only guaranteeing economic integration upon ratification of certain MEAs. In other words, it pushed to authorize the use of trade measures against non-compliance, denying a non-signatory of its WTO rights to exercise countervailing tariffs. This paper demonstrates that the Doha proposal can be effective when environmental policy and its trade obligations are endogenous. Under plausible circumstances, ratification by a non-signatory to the MEA along with free trade as a reward is the unique equilibrium outcome. Delocation to pollution havens does not occur, as optimal tariffs are positive if standards are not adopted. Tariffs however only work as a credible threat and do not emerge in equilibrium. Results are consistent with broad empirical evidence that opposes the pollution haven hypothesis and suggests capital movements to be non-pollution related.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.52.

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Date of creation: Apr 2005
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Handle: RePEc:fem:femwpa:2005.52

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Keywords: Environmental policy; WTO; Location of firms; Green tariffs; Multilateral environmental agreements; Doha declaration;

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  1. J. Peter Neary, 2000. "International Trade and the Environment - Theoretical and Policy Linkages," Working Papers 200018, School Of Economics, University College Dublin.
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  8. Zigic, Kresimir, 2000. "Strategic trade policy, intellectual property rights protection, and North-South trade," Journal of Development Economics, Elsevier, vol. 61(1), pages 27-60, February.
  9. J Peter Neary, 2003. "Europe on the Road to Doha - Towards a New Global Trade Round," Working Papers 200317, School Of Economics, University College Dublin.
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