Conference Agenda

We reassess the relationship between international trade and environmental performance by distinguishing two often conflated dimensions of openness: trade intensity and trade liberalization. Using sector-level data for OECD countries over two decades, we estimate multi–fixed-effects panel models for two environmental performance indicators—total sectoral CO2 emissions and carbon intensity (CO2/VA)—combining measures of openness with relative environmental-stringency indices for export and import partners. The results show that no single dimension of openness delivers, on average, robust emission reductions. Only when rising trade intensity is paired with effective liberalization—i.e., a regime of “genuine openness”—do we observe significantly “green’’ effects on emissions and carbon intensity. Moreover, regulatory asymmetries across partners yield configurations consistent with halo / Porter mechanisms when openness shifts toward stricter markets, and with carbon leakage [pollution haven] dynamics when dependence on laxer [stricter] suppliers increases. Overall, the findings suggest that the environmental impact of trade depends less on trade volume than on the interplay between the structure of openness and the international regulatory architecture.