Trade Effects of Environmental Technical Measures

Emilia Lamonaca and Fabio Gaetano Santeramo

The World Economy, 2025, vol. 48, issue 8, 1830-1838

Abstract: Technical measures aimed at environmental protection are increasing both in number and scope. However, their effects on trade are challenging to identify due to their qualitative nature and the broad range of requirements they encompass. We integrate existing data on environmental measures and apply recent advancements in gravity model methodology to assess the full extent of their effects. We use national trade flows to account for the border effects of environmental measures. Our analysis demonstrates that environmental measures tend to restrict trade. This is primarily due to the increase in compliance costs that these measures impose. These additional costs may discourage economies from entering or expanding in international markets, ultimately affecting the viability of trade relationships.

Date: 2025
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