Linking trade and environment in emerging economies: Korea’s ambition for making green free trade agreements

Abstract

In trade negotiations, developed countries have been frontrunners in advocating environmental protection whereas developing countries were reluctant to link environmental protection to their trade agreements. However, the recent trend of including environmental provisions (EPs) in free trade agreements (FTAs) shows a policy change in some of the emerging economies. Not only did they adopt EPs but they also actively introduced a comprehensive set of EPs – environmental chapters. Using the Republic of Korea (Korea)’s FTAs, this study explores why emerging economies come to include environmental chapters in their FTAs. Existing studies have offered explanations focusing on domestic politics. Yet, they do not specify the impact of the interaction between domestic and international politics. Through the lens of the two-level games, this study finds that the combination of domestic and international pressures plays an important role in making green FTAs. First, Korea has been pursuing environmental leadership at the world stage during the Korea-US FTA (KORUS) negotiation. Against this background, the US’ proposal to include an environmental chapter has reverberated within domestic politics. Second, the costs of implementing this environmental chapter were low. After the KORUS, Korea has been including similar environmental chapters because these chapters were cost-effective ways to promote its enduring environmental leadership. This finding has far-reaching implications for facilitating emerging economies’ green FTAs.

Keywords:

• Environment
• free trade agreements
• Korea
• emerging economies
• environmental leadership

Acknowledgments

I am indebted to participants of the trade and the environment panel at the ISA Annual Convention 2018, San Francisco for their valuable feedback to further advance this study. I also want to thank Dr. Injoo Sohn, Dr. Jung Eun Kim, Dr. Richard Hu, and Dr. Debby S.W. Chan for reading an earlier draft and offering encouragement and comments. Finally, thanks to the anonymous reviewers for their valuable and constructive comments.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 In the China–Georgia FTA signed in 2016, an environmental chapter (chapter 9. Environment and Trade) has nine provisions regarding levels of protection, enforcement of environmental measures including laws and regulations, multilateral environmental agreements, review of environmental impact, cooperation, and consultations. None of them is legally binding.

2 This study focuses on Korea’s position in the global trade system and therefore identifies Korea as an emerging economy for the following reasons. First, Korea’s capital–labor ratio shows that it is yet to be referred to as a developed country. The capital–labor ratio captures productivity and has been used as an indicator of economic development in the field of economics (Mason & Sakong, 1971). The higher ratio indicates a more intense use of capital than labor whereas the lower ratio indicates vice versa. Typically, developed countries are likely to have higher ratios whereas developing countries tend to have lower ratios. Korea has achieved rapid economic development through industrialization. Yet, its capital–labor ratio (2519.74) did not reach the level of other advanced economies such as the US or the UK (3333.61, 2573.86 in 2006, respectively, in the Penn World Table from Feenstra et al., 2015). Second, Korea has identified itself as a developing country in the World Trade Organization (WTO). Countries can choose their status in the WTO as developed or developing countries. Their responsibilities and benefits vary depending on their status as developed or developing countries. For instance, the WTO Agreements offer special and differential treatment provisions, which allow developing countries to delay the implementation of the Agreements for the purpose of enhancing their trading opportunities (https://www.wto.org/english/tratop_e/devel_e/dev_special_differential_provisions_e.htm). Although Korea is a member of OECD and demonstrates the soft power as a middle-power country, the above features highlight Korea as an emerging economy within a group of developing countries in the topic of trade.

3 I used a search platform provided by Korea Press Foundation (www.bigkinds.or.kr) in order to retrieve archived articles from Korean newspapers. A full URL was not available in some of the referenced articles.

4 The commitment was made in the East Asian Climate Partnership (http://17greengrowth.pa.go.kr/).

5 This cost does not include administrative costs of setting up the committee or drafting environmental cooperation projects. In this sense, low costs do not mean there was no cost of implementation at all. Instead, I argue that there are relatively low costs of implementation by focusing on adoption of new regulation in Korea’s legal system.

6 I traced the policy process from ratification to implementation of the KORUS by searching on Korean law database, the National Assembly reports and the list of bill proposals.

7 The government pledged to increase the share of the GODA of the total ODA to 25% achieved by 2013, and 30% by 2020.

Additional information

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Annie Young Song

Annie Young Song completed a doctoral study at the Politics and Public Administration Department at the University of Hong Kong and will be conferred her Ph.D. degree in December 2019. Her research interests cover environmental politics and policy, energy governance, international political economy and environmental politics in East Asia.