research

We study how trade policy shapes greenhouse gas emissions embodied in agricultural trade, linking structural gravity simulations to country-commodity farm-gate CH4 and N2O emissions. Our results show that existing tariff preferences raise embodied emissions by 37.9 megatonnes of CO2-equivalent, valued at about $3.4 billion annually using a recent carbon-border price, with livestock, especially beef, driving most of the increase. A zero-tariff benchmark, which reveals possible reallocations from continuing trade liberalization, is estimated to raise global CH4 and N2O emissions by 17.7 megatonnes CO2-equivalent, driven mainly by trade in crops, especially rice. Our findings illuminate how the existing global regime of tariff barriers shapes the environmental consequences of trade.

The Regional Comprehensive Economic Partnership (RCEP) free trade agreement was signed in 2020 by 15 Asia-Pacific countries and entered into force in 2022, encompassing many of the world’s largest economies, including China, Japan, South Korea, and Vietnam. The massive size of the agreement promises to significantly reshape the patterns of trade both regionally and globally, and quantifying the anticipated impacts of this nascent trade agreement is critical to establishing an understanding of how global trade dynamics are likely to evolve in the coming decades. We explore this important trade policy issue by quantifying the potential trade effects of RCEP, predicting counterfactual bilateral trade flows across 13 sectors for 160 trading countries using a structural gravity framework. Our findings show that the RCEP agreement yields substantial trade benefits, generating $501.5 billion in expanded trade among RCEP members, with impacts varying considerably across sectors and countries.