Examining industrial air pollution embodied in trade: implications of a hypothetical China-UK FTA

Yuquan W. Zhang (), Yong Geng (), Bin Zhang, Shaohua Yang, David V. Izikowitz, Haitao Yin, Fei Wu, Haishan Yu, Huiwen Liu and Weiduo Zhou
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Yuquan W. Zhang: Shanghai Jiao Tong University
Yong Geng: Shanghai Jiao Tong University
Bin Zhang: Ministry of Ecology and Environment
Shaohua Yang: Shanghai Jiao Tong University
David V. Izikowitz: Shanghai Jiao Tong University
Haitao Yin: Shanghai Jiao Tong University
Fei Wu: ETH Zürich
Haishan Yu: Shanghai Jiao Tong University
Huiwen Liu: Shanghai Jiao Tong University
Weiduo Zhou: Shanghai Academy of Social Sciences

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 11, No 46, 13253-13279

Abstract: Abstract Very few developed economies have a full free trade agreement (FTA) with China. This study employs one GTAP model and builds an extended environmental multi-region input–output model to investigate a hypothetical China-UK FTA, concerning embodied industrial emissions of SO2, PM2.5, NOX, and NH3. The economic sectors are also classified based on their embodied pollution intensity and trade advantage index under various FTA scenarios. Results show that the UK’s GDP and welfare and China’s welfare will increase, along with changes in their trade structures. Overall, this FTA brings about larger net impacts on embodied emissions of SO2 than on PM2.5, NOX and NH3, and both countries are net importers of the latter three pollutants. Key sectors such as non-metallic mineral products, chemical products, and agriculture are inclined to become less competitive and less polluting under the FTA. The inclusion of agri-food sectors exhibits slight counteracting effects in general. The findings are of policy importance as they provide insights into how best to target key sectors, seeking a balance between trade development and environmental protection.

Keywords: FTA; Embodied pollution; Environmental MRIO; GTAP; Trade competitiveness (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02612-z

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