Linking the environment and free trade agreements

Abstract

This dissertation explores the conditions for the inclusion of environmental provisions (EPs) in free trade agreements (FTAs). I argue that developing countries included the reference to multilateral environmental agreements (MEAs) because of the low implementation costs and a leadership role in environmental politics. My argument draws upon the eclectic approach inspired by synthesizing rationalism and constructivism. Existing studies do not adequately explain the case of developing countries and international embeddedness of FTAs. In an era of the global production network, the import-competition argument does not apply to developing countries, which trade intermediate products. Additionally, existing studies insufficiently highlight environmental issues in FTAs as an international commitment. In order to address these gaps, this dissertation consists of two parts. First, I connect the different types of EPs and existing explanations. This part of analysis informed that the explanation for including the reference to MEAs required countries to have a motivation reaching beyond import-competition. In the second part, I used Korea’s FTAs as a case study to find the conditions for the inclusion of the reference to MEAs. I employed mixed methods using a large-N analysis and a process-tracing method. In the case study, a counterfactual analysis is conducted to eliminate competing explanations. In the first part, I used a logit model to test existing explanations for three types of EPs, sanitary and phytosanitary (SPS EPs), technical barriers to trade (TBT EPs) and MEA related provisions (MEA EPs). The previous inclusion of EPs had significant effects on the decision to include all type of EPs. Import-competition is a statistically significant factor for the decision to include SPS EPs and TBT EPs but not MEA EPs. From this analysis result, I chose the reference to MEAs in Korea’s FTAs as the dependent variable in my case study. The second part is a case study of Korea’s FTAs. I find that the previous inclusion of EPs in FTAs reduced the uncertainty surrounding the consequences of having the EPs in the future FTAs by offering the information on the distribution of costs and benefits. At the same time, I identify that Korea’s leadership role in environmental politics shaped the policy choice of addressing environmental issues in trade. This dissertation makes three contributions to international political economy and environmental politics. First, as an empirical study, this study used an eclectic approach of bridging competing theoretical traditions – rationalism and constructivism. Second, the cost-benefit factor sheds light on the impact of a long-lasting institutional design in a subsequent period. Finally, it offered insight into the underexplored case of developing countries in the trade-environment nexus.