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 6 / 23 PLOS One Trade agreement, climate change and geography imports on CO2 emissions separately, suggesting that imports have positive correlation with consumption-based CO2 emission, whereas exports can mitigate the domestic CO2 emissions. Nexus between trade and trade agreements This aspect of the literature sheds light on the effects of trade agreements on trade from inter- national perspective. Therefore, previous studies, e.g., [57–59] find that trade agreements have substantial impact on bilateral trade among the trading partners. Their findings suggest that particularly agricultural products are firmly restricted under the WTO’s rules and regulation in order to protect the local industries. Authors [60] argues that preferential trade relation- ships are dissimilar with membership in the WTO due to legitimate groundworks. Precisely, with the support of free trade agreements (FTAs), multilateral trading system is much con- cerned for compatibility and radical changes under the framework of Article 24 GATT. Thus, trade agreements enrich the trade volume through the framework of WTO articles. Subsequently, [61] debate on economic provision of preferential trade agreements to analyze the intensive and extensive margin bilateral exports. They suggest that PTAs have remarkable impact on exports with respect to time. Furthermore, measures applied at the border and behind the border enlarge different trade relationships. In addition, [62] also argues that regional trade

agreements (bilateral, ASEAN, SAFTA) improve export efficiency over time. Furthermore, free trade agreements (FTAs i.e., SAFTA and ASEAN) bilateral agreements are most influencers and significant on exports with compared to PTAs (APTA & MERCOSER). Another study, e.g., [63,64] analyze the impact of trade agreements with international oligopoly using three-country model. Their findings suggest that trade agreements affect the country’s welfare through international trade system. However, non-member country is excluded from the effect of agreements. The author[65] also investigates the influence of provincial trade pacts on trading commodities. Findings suggest that regular trading part- ner’s preferential import share is decreased by 29.8%, which is outsized and substantial for net-importing countries. Conversely, [66] analyze the effects of geographic-oriented trade agreements on trade. Their findings document that trade agreements could not clue marginal exports above and beyond the general exporting effect of trade agreements due to legal protec- tion of geographical indications. The above literature demonstrates that previous studies did not focus on the simultaneous impact of geographic factors, such as natural and man-made factors, on bilateral exports, especially in Asian countries. The simultaneous impact of geographic factors could not be discussed and linked with the GDP in previous studies. Precisely, an increase in GDP may affect the bilateral exports through geographic factors such as distance, access to Ocean and so

on. In addition, researchers have extensively analyzed the nexus between trade openness and CO2 emissions for the largest trading and CO2 emission producing countries; however, some undeniable breaches exist in the literature. Therefore, as best our knowledge, a very few studies focus on the effect of climate change (CO2 emissions) on bilateral exports in Asian countries. In the contrast, it is essential to analyze the effect of CO2 emissions on bilateral exports. The reason may behind that CO2 is an indicator of climate change that strongly influence the geographic-oriented environment. Consequently, exports may affect due to production costs, shortage of natural resources etc. Another gap motivates to analyze the effect of trade agreements on bilateral exports. There- fore, a scanty study considered the trade agreements such as WTOx and PTAs based on geographic factors. Thus, this study investigates the impact of trade agreements, the reason may behind that trade agreements are diverse in nature, and sign based different reasons such as reduction in tariff, quantity restriction, labor mobility, capital mobility as well as political diplomacy.