Will digital trade provisions in regional trade agreements effectively reduce CO2 emissions in member states?

Abstract

This paper constructs a depth index of the regional trade agreement (RTA) digital trade terms based on text data from 2000–2021 in the TAPED database and carbon dioxide (CO2) emission data from the Eora database since 2000. We construct a gravity model between the depth index of digital trade terms and carbon CO2 emissions to analyze the impact of digital trade terms in RTAs on the CO2 emissions of member countries. The results show that the depth of digital trade clauses in RTAs significantly reduces the CO2 emissions of member countries. Still, the impact of different clause depth indexes on CO2 emissions is different on the supply and consumption sides. The results of the heterogeneity analysis based on the types of trade agreements show that the depth of RTAs has the most significant impact on the CO2 emissions among members of South–North trade agreements. The analysis of results based on industry heterogeneity shows that digital trade terms significantly impact manufacturing CO2 emissions. The article proposes that more attention be paid to the negotiation of digital trade rules in RTAs, the construction of South–North trade agreements, and the impact of digital trade on the CO2 emissions of different industries.

KEYWORDS:

• Regional trade agreements
• clause depth index
• carbon dioxide emissions
• production side and consumer side

JEL Classifications:

• F18
• Q43
• P28

Acknowledgements

We are grateful to the Major Projects of the National Social Science Fund (20&ZD119, 19&ZDA048), and Postdoctoral Fellowship Program of CPSF (GZC20233091) for financial support. Acknowledgments to Professor Yu Peng from the Shanghai Academy of Social Sciences for invaluable guidance on data processing in this paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Major Projects of the National Social Science Fund: [Grant Number 20&ZD119]; Postdoctoral Fellowship Program of CPSF: [Grant Number GZC20233091].