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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.

Suggested Citation

  • Alireza Naghavi, 2005. "Multilateral Environmental Agreements and Trade Obligations: A Theoretical Analysis of the Doha Proposal," Working Papers 2005.52, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2005.52
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    References listed on IDEAS

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    1. J. Peter Neary, 2004. "Europe on the Road to Doha: Towards a New Global Trade Round?," CESifo Economic Studies, CESifo, vol. 50(2), pages 319-332.
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    Cited by:

    1. Peter H. Egger & Christoph Jessberger & Mario Larch, 2013. "Impacts of Trade and the Environment on Clustered Multilateral Environmental Agreements," The World Economy, Wiley Blackwell, vol. 36(3), pages 331-348, March.

    More about this item

    Keywords

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

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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