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Free Trade Agreements And Climate Change

As far as geometry is concerned, while the climate diplomacy of the past two decades has been at the multilateral level at the United Nations, this new economic phase will require a more focused and variable configuration. Given that the speed and volume of greenhouse gas emission reductions are the most important, a universal multilateral approach will be unnecessary and even counterproductive. Global emissions focus on a limited number of regions and industrial sectors, so it will not be necessary to take the extraordinary time normally necessary to reach unanimous agreement within the international community. The compositional effect refers to how trade liberalization alters the mix of a country`s production towards products for which it has a comparative advantage. This redistribution of resources within a country is how trade improves economic efficiency. The impact on greenhouse gas emissions will depend on areas in which a country has comparative advantages. The composition effect will reduce greenhouse gas emissions if expanding sectors are less energy-intensive than contracts. It is therefore difficult to predict in advance whether the composition effect will result in an increase or reduction in greenhouse gas emissions. [1] See climateactiontracker.org/global/temperatures/ A second factor is a more open trade and investment policy. Countries have opened their trade regimes unilaterally, bilaterally, regionally and multilaterally. Measures that have imposed, restricted or banned trade have either been removed or significantly reduced.

These changes in economic policy have facilitated not only trade, but also the number of countries participating in global trade expansion. Developing countries, in particular, now account for 36% of world exports, about twice as much as in the early 1960s. Trade economists have developed a conceptual framework to study the impact that trade-opening measures can have on the environment. This framework, first used to study the environmental impact of the North American Free Trade Agreement (NAFTA), divides the effects of trade liberalization into three independent effects: scope, composition and technology.

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