East Asian Way of Linking the Environment to Trade in Free Trade Agreements

• Author: Min Gyo Koo,Seo Young Kim
• DOI: 10.1177/1070496518794234
• Published date: 01 December 2018
• Date: 01 December 2018
• Subject Matter: Articles

Article

East Asian Way of Linking

the Environment to Trade

in Free Trade Agreements

Min Gyo Koo

1,2

and Seo Young Kim

3

Abstract

This study examines how East Asian countries have responded to the challenges that

the trade–environment nexus presents. A total of 85 free trade agreements (FTAs)

concluded by 15 East Asian economies are analyzed by using ordered logistic regres-

sion and generalized ordered logistic regression techniques. The results show that

East Asian countries incorporate strong and specific environmental provisions in

their bilateral FTAs when they share concern about environmental issues. These

findings reject the view that East Asian countries have adhered to collective ideas

that favor weaker and ill-defined environmental commitments related to trade. It is

notable that environmentally conscious East Asian countries have responded

positively to trade–environment linkages with like-minded partners. Meanwhile,

the results partially support the conventional view that an environmentally conscious

big country can bully environmentally less conscious small countries into making

strong and specific environmental concessions.

Keywords

East Asia, trade–environment nexus, issue linkage, free trade agreement,

international environmental cooperation

Journal of Environment &

Development

2018, Vol. 27(4) 382–414

!The Author(s) 2018

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DOI: 10.1177/1070496518794234

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1

The Graduate School of Public Administration, Seoul National University, South Korea

2

The Asia Development Institute, Seoul National University, South Korea

3

Reubin O’D. Askew School of Public Administration and Policy, Florida State University, Tallahassee, FL,

USA

Corresponding Author:

Min Gyo Koo, The Graduate School of Public Administration, Seoul National University, 1 Gwanak-ro,

Gwanak-gu, Seoul 08826, South Korea.

Email: mgkoo@snu.ac.kr

During the past 30 years, Asia has lost half its forest cover, and with it countless

unique animal and plant species. A third of its agricultural land has been degraded.

Fish stocks have fallen by 50 percent. No other region has as many heavily polluted

cities, and its rivers and lakes are among the world’s most polluted. . . .While rapid

economic development has created dynamism and wealth, Asia has at the same

time become dirtier, less ecologically diverse, and more environmentally vulnerable.

(Asian Development Bank [ADB], 1997, p. 199)

East Asia is one of the most dynamic regions in the history of postwar economic

development and was dubbed the ‘‘East Asian miracle’’ (World Bank, 1993). Its

growing share in global trade f‌lows best illustrates the region’s remarkable eco-

nomic takeof‌f.During the 1970–2010 period,the region’s global share soaredfrom

about 15% to more than 30%, with its exports growing 3 times faster than in the

rest of the world for the most recent 10-year period. In value-added terms, intrar-

egional trade alsogrew on average by more than 10% per year, 2 times faster than

in other parts of the world (International Monetary Fund, 2014, p. 47).

The rapid economic growth, however, came with high environmental costs.

As East Asia’s economic transformation has taken place faster than anywhere

else, the environmental impact has been worse. Signif‌icant portions of environ-

mental liabilities have been attributed to the ‘‘grow now, clean up later’’ mantra

(Angel & Rock, 2009, p. 232; Bøas, 2000, p. 419; Iwami, 2001, p. 620). Critics

note that the practice of downplaying the environmental consequences of

export-oriented industrialization has prevented many in the region from embra-

cing global environmental standards when trading in goods and services. East

Asian countries are allegedly skeptical about linking environmental consider-

ations to trade policy because they fear that it could lead to an increase in green

protectionism or eco-imperialism. Their environmental concerns tend to be ‘‘dir-

ected towards problems directly af‌fecting living conditions and population

health, not towards broader environmental issues such as global warming and

biodiversity’’ that have signif‌icant trade policy implications (Lian & Robinson,

2002, p. 110).

In contrast to the prevailing view, however, various kinds of policy responses

to the trade–environment nexus have emerged over the past decade. Recent

empirical studies have found that the cross-national transfer and dif‌fusion of

environmental policies has also taken place in the non-Western world, including

East Asia, and that the gap between the West and the non-West has been nar-

rowing over time (Sommerer & Lim, 2016). A closer look also reveals that East

Asian countries have begun to use not only the World Trade Organization

(WTO) but also free trade agreements (FTAs) as an ef‌fective policy platform

to promote environmental cooperation among trading partners (Bernauer &

Nguyen, 2015; Monteiro, 2016; Morin, Pauwelyn, & Hollway, 2017).

East Asian countries now realize that it is becoming increasingly dif‌f‌icult to

keep trade discussions decoupled from the environment. Because they are highly

Koo and Kim 383

dependent on trade, both developed and developing countries in the region have

to respond to foreign consumer preferences for ecologically friendly products by

imposing higher environmental standards. It is not a coincidence that East Asian

countries began to participate proactively in negotiations in the WTO

Committee on Trade and Environment (CTE), which is designed to carry out

the tasks of clarifying trade and environment issues and determining whether

any modif‌ication to multilateral trade rules is needed. Not surprisingly, the

number of submissions to the CTE from the developing world has increased

in the new millennium (Harashima, 2008, pp. 18–24).

Perhaps equally signif‌icant, but little noticed, is the attempt at linking the

environment to trade through FTAs. With the interest of East Asian countries in

economic regionalism surging dramatically, the geographic dif‌fusion of prefer-

ential trading agreements has been at the forefront of many scholars’ minds

(Aggarwal & Koo, 2008, 2016; Koo, 2012; Solı

´s, Stallings, & Katada, 2009).

The most important locus of trading agreements has been the active pursuit of

FTAs at the bilateral level. As of June 2018, 23 East-Asia-specif‌ic FTAs have

been concluded. If one includes trans-regional accords with countries outside

East Asia, the number would rise to 87.

1

Many, if not all, FTAs include envir-

onmental provisions with varying degrees of strength and scope (George, 2014;

Monteiro, 2016; Morin et al., 2017).

Many East Asia scholars have written about the environmental consequences

of the region’s economic growth and industrialization and about the issue of

harmonizing multilateral trade rules with environmental standards (ADB, 1997;

Haque, 2005; Kim, 2006). However, few have joined the debate about whether

and to what extent preferential agreements can aggregate individual trade policy

preferences around a joint position vis-a

`-vis the trade–environment nexus and

thus facilitate both the establishment and the implementation of environmental

norms and procedures.

This study focuses on the trade–environment nexus within the bilateral FTAs

concluded by East Asian economies. Using individual cases and quantitative

methods, this study aims to answer the following questions. To what extent

do East Asian economies accept environmental provisions in their bilateral

FTAs? Under what conditions are they induced to do so?

The remaining parts of this study unfold in four sections.

The ‘‘Theoretical and Empirical Background’’ section of‌fers theoretical back-

ground and a linkage framework to guide an empirical analysis of the trade–

environment nexus espoused in East Asian FTAs. This section f‌irst explicates the

mechanisms and concepts of issue linkage with a focus on three ideal types:

tactical, substantive, and fragmented linkages. Then, it raises the question of

how trade is connected to the environment and discusses the debate between

neoclassical and ecological perspectives. This section also examines how the

global trading regime centered on the WTO has addressed and incorporated

the nexus issue in trade rules and negotiations. It is noted that while having

384 Journal of Environment & Development 27(4)