Asymmetric trade barriers and CO2 emissions in carbon-intensive industry

Abstract

Since large carbon emissions are transferred through international trade, it is vital to explore the role country-specific trade policy has on carbon-intensive industries. The present study contributes to a deeper understanding of the connection between trade and environment in the literature, especially the impacts of trade barriers on carbon emissions. This topic has received little attention despite the importance of trade barriers to climate change and carbon emissions. Thus, we investigate the asymmetric trade barriers in carbon-intensive industries across different countries and describe the facts and motivations of these trade barriers in carbon-intensive industries. We list some political and trade explanations for the existence of trade barriers and empirically test the impacts of interest groups on trade barriers by the IV-2SLS method. Further, we have observed that certain highly developed countries, including Belgium, Switzerland, and Japan, are providing a notable implicit subsidy valued at over 200 USD per ton for carbon-intensive imported products. Our work carries essential implications for understanding how the manipulation of trade barriers could cause impacts on the environment.

Keywords: CO(2) emissions; Carbon subsidy; Interest group; Trade barriers.