Three essays in trade in environmental goods of APEC members: an exploratory analysis
Creators: name: Tran, Thi Thu Huong
Publisher: name: Canberra, ACT : The Australian National University
Year: 2018
Subjects: Environmental goods, environmental performance, environmental health, ecosystem vitality, renewable energy, environmental monitoring analysis and assessment, environmental protection, environmental preferable products, left-wing party, right-wing party,tariff, non-tariff measures, majoritarian and proportional systems

description: Many emerging economies in Asia have started to move towards a new sustainable development paradigm that would facilitate increasing the phase of poverty reduction along with environmental protection (ADB-ADBI 2013). Thus, there has been an increasing awareness of climate change, and environment protection activities such as the carbon sequestration and the Clean Development Mechanism (CDM). Such awareness has created demand for environmental goods (EGs), which are mostly imported from developed countries. For example, it is interesting to learn from a recent study by the U.K. Joint Environmental Markets Unit (UKJEMU) that there will be increasing demand from countries like Indonesia, Malaysia, Philippines, and Thailand for EGs concerning solid-waste handling and disposal, and also for filtration and purification of water. It is reported that about 50% of total EGs to be used within 2030 are yet to be created, which emphasizes the urgent need for funding and research and development (R &amp; D) to develop and transfer the technologies to the needy countries. This situation provides an opportunity to strengthen regional production and export capabilities in the area of EG through regional cooperation. Unfortunately, trade and investment in EGs are very low compared to trade and investment in pollution-intensive products (Mikic 2010). The global market for environmental goods and services was estimated to have reached US$ 866 billion in 2011 and is expected to rise to US$ 1.9 trillion by 2020 (EBI 2012). Although the effective tariffs on EGs are low, the non-tariff barriers, or ‘behind the border’ constraints, are very high (Kalirajan 2012). Therefore, numerous efforts have been undertaken worldwide to eliminate tariff and non-tariff barriers on EGs. As a consequence, countries are implementing numerous policies related to financial access, technology transfer, awareness raising, and regional cooperation to boost EGs trade. Moreover, environmental concerns in trade has been incorporated into various trade agreements following the North American Free Trade Agreement (NAFTA) in 1992. Environmental policies were also included in several prominent regional agreements such as CITES and Montreal Protocol by detailed element of different environmental agreements (ESCAP 2006). In addition, they have been addressed by trans-regional and bilateral free trade agreements (FTAs) such as the Trans-Pacific Strategic Economic Partnership Agreement (SEP), Trans-Pacific Partnership (TPP), the US-Singapore FTA (USSFTA), and the New Zealand-Thailand Closer Economic Partnership Agreement (CEP). A broad consensus of these agreements is that environmental issues are likely to be the dominant issues in various trade agreements in the near future (ESCAP 2006). Among these efforts, APEC has issued a list of 54 EGs and reduced tariffs on these goods on a volunteering basis of members. In addition, there are other efforts in clarifying EGs lists, and in negotiating tariff reductions on EGs under the WTO. It is in this context; the following important trade policy-oriented question needs to be answered. The first one is that are the efforts of improving the infrastructure and policies towards promoting EGs trade effective in the Asian region? This crucial question has not been addressed adequately in the current literature and the objective of this thesis is to rectify the limitation. The second crucial and empirical question is whether EGs trade is good for the environment. Examination of impact of EGs exports and imports will provide APEC members with evidence for their EGs trade policies development. Furthermore, even though environmental goods trade is expected to bring both economic and environmental benefits to all trading countries, a number of countries are still reluctant to participate in the negotiation under the WTO on the Environmental Goods Agreement. This motivates the thesis to use society-centred approaches to examine how domestic politics determine the variation in countries’ EGs protection preference, which is reflected in the level of tariffs and non-tariff measures (NTMs) on environmental goods (EGs). In order to address the first question, the second chapter uses the Stochastic Frontier Gravity (SFG) model to explore determinants of EGs trade of APEC-member countries and their export efficiency (EE). This chapter decomposes 54 EGs in the APEC list into four subgroups: renewable energy, environmental monitoring analysis and assessment equipment, environmental protection, and environmental preferable products. The study discovers that even though tariffs have a significant impact on exports of the total EGs, and all EGs subgroups, they affect negatively exports of only several countries for RE, EME, and EP. While RE, EME, and EP exports of the whole region and most individual countries are positively affected by their partner APEC membership, EPP exports reduce when partners are APEC-member countries. The high value of gamma suggests that the variation in EGs and four subgroup exports comes from ‘behind the border’ constraints. This implies that APEC-member countries have to eliminate their infrastructure and institution constraints to increase their exports. EPP export performance has outperformed other subgroups. The export performances of APEC members suggest that these countries have potential for improving their export performance, especially developing countries, such as Papua New Guinea, Peru and Brunei. The third chapter examines the impacts of EGs trade on environmental performance in order to answer the second research question. EGs are divided into renewable energy, environmental monitoring analysis and assessment equipment, and environmental protection and environmental preferable products. Environmental performance is decomposed into environmental health and ecosystem vitality. The empirical results suggest positive impacts of EGs exports and imports on environmental performance. Exports of environmental goods have beneficial impacts on environmental health measure, although their estimated impact on ecosystem vitality measure is statistically insignificant. These results support the reduction in barriers on EGs trade, which has policy implications towards increasing the technology, awareness, price, and environmental-regulation effects, and minimizing the scale effect of EGs exports. The fourth chapter is to answer the third research question. It uses society-centred approaches to examine how domestic politics determine level of tariffs and NTBs on EGs. It is suggested that there is a robust relationship between democracy and reduction in tariffs and NTBs on EGs. While higher corruption is likely to lead to higher trade barriers, better regulatory quality and more environmental concerns reduces them. NTBs seem to be higher in increase in majoritarian systems and when left-wing parties in power. These results provide an explanation for the variation across countries in trade barriers on EGs. The policy implications are to increase democracy, regulatory quality and reduce corruption. Moreover, there is a need to enhance individuals’ environmental concerns and voice of environmental groups so that this interest can be reflected in trade policies and contribute to NTMs reduction.