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

Alireza Naghavi

No 2005.52, Working Papers from Fondazione Eni Enrico Mattei

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.

Keywords: Environmental policy; WTO; Location of firms; Green tariffs; Multilateral environmental agreements; Doha declaration (search for similar items in EconPapers)
JEL-codes: F13 F18 F23 H23 Q56 R38 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-env, nep-geo and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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