Climate change, geography and trade agreements: A perspective of Asian bilateral trade

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 17 / 23 PLOS One Trade agreement, climate change and geography Conclusion This study investigates the effects of geographic factors, climate change and trade agreements on bilateral exports for Asian countries. To do so, we use the panel dataset for Asian countries period from 2000 to 2020 by employing the augmented gravity model. Findings demonstrate that countries better utilize the natural and man-made economic activities for the bilateral exports among their trading partners. More specifically, GDP and geographic factors are complementary in determining the export level and probability in both locations. Besides, the marginal impact of natural and man-made activities concerning the GDP is positively affected by adding the interaction terms in the model. The marginal export level and marginal export probability concerning the geographic fac- tors are greater than zero because of the additional change in natural and human-made eco- nomic activities. Countries that have access to the Indian or the Pacific Ocean and common borders can increase the export level and its probability between bilateral trading partners through establishing the transport infrastructure. Conventional gravity variables, such as the GDP and distance or remoteness, including control variables, have positively and negatively impacted bilateral exports and their probability, respectively. Remoteness reduces the export level in terms of charging high trade costs or transportation movement prices but presents it

differently in the countries. Thus, the countries must improve their natural and man-made economic activities through optimal allocation to enhance the export level and probability at above average. In addition, this study probes that whether preferential trade agreements are favorable or unfavorable to bilateral exports. PTAs are extensively diverse and difficult to treated any more in the empirical research as a homogenous variable, the reason may behind that expansion in international trade development, inclusion of new innovation and geographic factors and so on. Therefore, the clauses of WTOx namely labor mobility, capital mobility, competition policy and environmental standards were investigated, suggesting that each clause has positive impact on bilateral exports. Besides, climate change (CO2 emissions) has also positive impact on bilateral exports through three effects, scale effect, technique effect and structural effect. It is worth notable that exports can be increased after signing the trade agreements with regards climate change between the trading partners. Policy implications We recommend policy implications: countries should productively utilize 196% on average their natural resources to enhance bilateral exports through the infrastructure connectivity in Asia. Countries with the largest land area should focus on mountains, deserts, temperature, and climate changes in terms of land use for developing a trade-related environment. For instance, China, Russia, Indonesia, India, Pakistan, and Iran should adopt strategies related

to geographic factors (e.g., reduction CO2 by 10.2%), provide better facilities at cross borders, and develop multilateral projects. Asian countries who share a common border can benefit from bilateral exports but require better facilities and must utilize geographic endowments. Similarly, Asian countries with islands or do not share borders, such as Sri Lanka, the Mal- dives, Japan, and the Philippines, must focus on 168.9% facilities concerning access to the ocean (seashore or ports). Findings further suggest that natural geographic factors should be improved by 16.325% (estimated by structural gravity technique), resulting in relatively low magnitudes in domestic and partner countries. In the location of geographic factors in domestic (exporter) countries, export levels are affected because of country characteristics. In contrast, man-made geo- graphic factors seem to have a relatively high impact. This suggests that man-made economic