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 1 / 23 OPEN ACCESS Citation: Liang Q, Shao L, Hussain Z, Chao Y, Liu H, Wang C (2025) Climate change, geography and trade agreements: A perspective of Asian bilateral trade. PLoS One 20(4): e0320363. https://doi.org/10.1371/journal. pone.0320363 Editor: Asif Khan, Hainan University, CHINA Received: July 31, 2024 Accepted: February 18, 2025 Published: April 25, 2025 Peer Review History: PLOS recognizes the benefits of transparency in the peer review process; therefore, we enable the publication of all of the content of peer review and author responses alongside final, published articles. The editorial history of this article is available here: https://doi.org/10.1371/journal. pone.0320363 Copyright: © 2025 Liang et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Data availability statement: This data is not collected from third party. Therefore, other RESEARCH ARTICLE Climate change, geography and trade agreements: A perspective of Asian bilateral trade Qianxu Liang1, Lin Shao1*, Zahid Hussain 2*, Yufang Chao1, Haiying Liu1, Chaonan Wang1 1 Department of Economics and Management, Qilu University of Technology (Shandong Academy of Sciences), Jinan, PR China, 2 Business School, Faculty of Economics, Liaoning University, Shenyang, P.R. China * linshao@qlu.edu.cn (LS); zahiduibe@yahoo.com (ZH) Abstract

This study investigates the simultaneous effects of geographic factors, trade agreements, and climate change on bilateral exports in Asian countries. We estimate the correlation with bilateral exports by utilizing a panel data set from 2000 to 2020, employing various econometric techniques, particularly the structural gravity model. Therefore, this study aims to examine the simultaneous or complementary impact of influencing factors on exports and link them with the gross domestic product. Findings demonstrate that geo- graphic factors are crucial for determining bilateral exports in terms of increasing trends. Furthermore, geography plays a crucial role in enhancing the magnitude and probability of bilateral exports between trading partner countries. Moreover, bilateral exports have declined because of the simultaneous impact of geographic factors, climate change, and economic size. Thus, geographic factors and economic size affect marginal exports to varying degrees. This study suggests that the simultaneous increase in economic size, trade agreements, and geographic factors can enhance the bilateral export level and its probability at an above-average rate between trading partner countries. Introduction Exports always play a vital role in economic growth and development for each economy; how- ever, they are affected by several factors, especially natural and man-made geographic factors [1, 2]. Therefore, geography is categorised into two aspects: first, natural geography, which comprises the physical fundamentals of nature, such as mountains, seashores, and natural

resources. Second, man-made geography comprises the fundamental’s spot of diverse eco- nomic actions [3]. However, while challenges and facilities are created by geographic factors, they remarkably impact firms’ decisions regarding exports, infrastructure, and market access [4–6]. Distance is a crucial factor for trade, which significantly increases international trade costs via the transportation system. More analytically, the distance is detected via geographic coordinates, e.g., latitude and longitude. Thus, the differentiation in coordinate points stimu- lates the transport infrastructure level (which is a determinant of trade costs) [7,8].

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 2 / 23 PLOS One Trade agreement, climate change and geography In addition, climate change indirectly affects exports through the weather changes because firms export the weather-oriented goods. Climate change is varied because of the high level of CO2 emissions [9,10]. Besides, CO2 emission is an important element in climate change, and can directly or indirectly affect the environment, including the natural geographic factors such as temperature, mountains, and seashores [11]. Man-made geographic factors also substantially affect export-related activities through firms’ strategies (e.g., increasing return to scale, transportation costs, and trade costs) [12]. However, the influence of these factors is geographically varied. Countries are rich with natural and man-made resources, may gain from trade, whereas countries with poor geographic factors cannot achieve export targets. Nevertheless, the literature shows that traditional theories are derived based on the above geographic concepts instead of giving great attention to empirical ways that are directly or indirectly related to exports. Notably, some man-made factors particularly trade agreements can have substantial influ- ence on bilateral exports, which are signed based on several reasons such as economic size, geographic factors (i.e., distance, common border), bilateral, multilateral political and cultural similarities and so on. Therefore, countries are experiencing exceptional growth of trade

agreements. Recently, more than three hundred preferential trade agreements (PTAs) have been implemented globally. The initial trade agreement-related activities were solely regional, and lifted out the sanctions with restriction of article 24 of GATT, however, afterward PTAs, connecting the countries or groups of countries from distinctive regions. These trade agreements could be bilateral or plurilateral (common markets, economic and custom unions). They enlarged the scope of negotiations to areas which out of WTO mandate, and become favorable policy mechanisms. In addition, trade agreement arrangements operate debate for trade-related policy issues. The foundation, span, and reporting of these trade agreement-related arrangements are diverse from each other, and exhibit the extensive het- erogeneity. Interestingly, PTAs are classified into two aspects: shallow and deep integration. So, the shallow integration indicates reduction or elimination of trade barriers, while hidden incorporation refers to coordination of domestic policies and concealed border measures [13,14]. According to World trade organization (WTO), [15] the depth and coverage of PTAs management diverges from regional trade agreement (RTA) to another. Currently RTAs have tendency to go extremely afar tariff-cutting exercise but not utterly those associating with most developed economies. They offer progressively multifaceted policies to govern intra- trade with respect to custom management, protection and standards including preferential

monitoring charter for common trade facilities. Furthermore, a record high-level RTAs go beyond conventional trade policy mechanisms involve the reginal rules on competition, labor and investment. This study concentrates on the fundamental question of whether PTAs contribute to bilateral exports or adversely affect them, as previously assumed by author[16]. The prevailing view suggests that PTAs add value to the development of international trade based on tradi- tional trade agreements while simultaneously operating at the multilateral level [17]. Thus, it is notable that negotiations are required to reinvestigate despite the border measures. The trade agreements are complicated, and their content may change drastically from agreement to agreement [18]. Besides, former literature affianced investigation to present distinction clauses in PTAs such as WTO + and WTOX by introducing [19–22] in an article. The distinction WTO + refers to negotiable areas which fall under the WTO mandate such as customs administration, tariff barriers, export and import restrictions and technical barriers to trade etc., whereas WTOx distinction indicates the independent of WTO mandate, e.g., mobility of the labor, authors can directly collect the data from given sources (websites). Data is publicly available at different websites. It is stated that the data is unable to upload on any link or system after several attempts. So, it is advised that the data can be downloaded from recommended web- sites. The reason is that there are 44436 obser- vations, which are extremely large. Besides,

data is not only country level but also bilateral (country 46* country*46*year21=44436). The panel dataset covers the 46 Asian countries that collect information on variables period from 2000 to 2020 through several internation- al organizations (e.g., the World Bank, CEPII, and the United Nations Conference on Trade and Development (UNCTAD). The bilateral exports data is collected by UNCTAD website https://unctad.org. The data on tariff, popula- tion and gross domestic product variables is available on the website of World Development Indicators (WDI) https://databank.worldbank. org/source/world-development-indicators. Therefore, the data on variables namely dis- tance, access to Ocean and common border is available on the website of CEPII https://www. cepii.fr/cepii/en/bdd_modele/bdd_modele.asp. In addition, the trade agreement (PTA)’s data are collected from WTO website, https://www. wto.org. PTA dummy variable refers to one if exporter and importer listed were in any one of PTA’s listed either the WTO website https:// www.wto.org. Besides, the data on CO2 emis- sions is available from the World Input-Output Database (WIOD) website https://www.rug.nl/ ggdc/valuechain/wiod/. Funding: The author(s) received no specific funding for this work. Competing interests: The authors have declared that no competing interests exist.

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 3 / 23 PLOS One Trade agreement, climate change and geography competition policy and environmental standards. Some studies, e.g., [23] and [24] analyzed the impact of WTO + and WTOx on trade flows separately based on distinction structure. Their findings are contradicted to each other in relationship between trade and WTOx clauses. However, a scanty analysis was considered WTOx clauses as a substantial aspect evaluated by numerous studies. Each area of WTOx remained to be unidentified as a certain contribution. Thus, this paper emphasizes on clauses in WTOx category by presenting the labor mobility, competition policy, capital mobility and environmental standards [25]. The present study aims to analyze the simultaneous influence of geographic factors, climate change, and trade agreements on Asian bilateral exports and investigate how geographic factors significantly impact exports. Estimating the influence of geographic factors on exports gives a clear picture of the amount of investment needed to improve man-made or natural resources. This study adds to the literature by exploring geographic factors that affect bilateral exports. Related literature has failed to incorporate the estimation of the simultaneous impact on bilateral exports. Simultaneous impact identifies whether natural or man-made geographic factors (e.g., physical distance, ocean access, and shared common border) separately affect bilateral exports. Moreover, a contribution includes the one-belt, one-road regions, especially

Asian countries, which are the most diverse geographically. In addition, this paper adds value by investigating the role of trade agreements in bilateral exports in depth. The clauses of the WTOx distinction provide pathways to ensure the environmental standards, safeguards, and quality of exported commodities. Thus, it is essential to investigate the effect on bilateral exports. Lastly, this study links climate change (CO2) emissions and gross domestic product (GDP) with bilateral exports to estimate substitutability and simultaneous impact. We use panel data at the bilateral level for 46 Asian countries and utilize export equa- tions, including control variables. The heterogeneity of a country’s characteristics supports the adoption of controlling approaches that are correlated or uncorrelated with explanatory variables and error terms in this model. Moreover, this paper deals with potential bias due to heterogeneity and model selection preconceptions by using the [26]. The outcomes illustrate that developments in geographical factors can expand the export level between the countries. Improving the quality and quantity of natural geographic factors enhances bilateral exports. Besides, the results indicate that both geographic factors complement each other when deter- mining the bilateral export level between trading partners. We attempt to reverse the poten- tial reverse causality of exports to geography, climate change, and trade agreements through changes in the measurement scale, which cannot affect the export volume.

The discussions in the different sections are as follows: Related studies are explained in the previous work section. The conceptual framework, estimation model, and econometric tools are presented in the methodology section. The experiment and discussions are reported in the discussion section. The conclusions section concludes with recommendations and future research directions. Previous work Several studies have explained the effects of geographic factors, CO2 emissions, and trade agreements on international trade based on different models. However, our concern is esti- mating the simultaneous impact on bilateral exports by considering geographic factors. Nexus between geographic factors and trade This strand of literature explains the correlation between geographic factors and trade. Several studies, e.g., [27] argued that climate change have remarkable impact on trade approximately 54% and 56% in high-income and upper-medium income countries respectively. Another

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 4 / 23 PLOS One Trade agreement, climate change and geography study, e.g., [28,29] find that complementarity and comparative advantage drastically stimulate the bilateral exports between China and Vietnam in agricultural sector based on geographical factors such as location, seashore and border sharing over time. However, partner countries have win-win situation by trading agri-based products under export-strategies. The author [1] discussed that geographic factors such as climate change potential and ocean access have a simultaneous effect on international trade. Precisely, climate change potential affects international trade through access to the oceans, indicating that the oceans are encompassed by different geographic landscapes. Thus, international trade is likely to occur in multiple aspects. Subsequently, [30,31] also argue that geographical indications, e.g., market access and protected designation of origin, have a remarkable impact on international trade. However, market access influences international trade through economic gross domestic product (GDP) by firms regarding production. Another study, e.g., [32–34], emphasizes natu- ral geography (climate change) for mitigation and adaptation through man-made geography, suggesting that geographic factors such as climate change and urbanization development have a joint effect on international trade. His research estimates potential trade-offs and conflicts between geographic factors (e.g., urbanization). Thus, trade-offs and conflicts have been

gaining traction. The trade-offs are associated with natural and man-made geographic factors such as land, energy, transport, and green infrastructure. The findings conclude that mitiga- tion measures could be impacted by increasing exposure to natural geographic factors (e.g., flooding and islands). Adaptation measures also enhance natural geographic factors (e.g., greenhouse gas emissions). However, our study contradicts this by exploring the simultaneous impact of natural and man-made geography on bilateral exports. In addition, [35] argued that transportation costs have remarkable impacts on the bilat- eral exports. The reason is that transportation costs have direct correlation with the length of routes. Precisely, the transport costs are critical and heterogenous which are measured based on geographic locations such as mountainous area, desert and seashore, landscape as well. Moreover, [36] concluded that international trade and transport infrastructure are declining as a direct result of climate change. Climate change discourages trade flow in several coun- tries. National climate change can indicate confusing decisions regarding the climate change’s effect in international trade flows. The largest domestic market and more diversified trade pat- tern can absorb the climate shocks. Furthermore, climate change may reduce the comparative advantage thereby export level could be deteriorated. Subsequently, [37] showed that direct effect of climate change adversely affects the global supply chain and trade patterns. Moreover,

extreme weather damages the transport infrastructure such as road, railway and maritime routes. Consequently, transportation costs could be higher for international trade. Although studies related to climate change and international trade are few, qualitative agreement on climate change indicates that transport infrastructure would be balanced. The [38] demonstrated that climate change could imitate modes of transportation. Another study, e.g., [39] estimated the geographic structure of Ricardian into the general equilibrium for bilateral trade that are relevant to absolute and comparative advantages and geographical barriers for trade. Their implementations explore the probabilistic design of the heterogeneity of technology in which the model spreads naturally, several countries separated by geographi- cal barriers. This design hints at a flexible framework for operating the geographical structure in the general equilibrium analysis. By extending the model for trade, which has significant application to the sensitivity of trade to input costs and geographic barriers. Moreover, given the goods, the location and its impact on input costs can play an important role. Potential gains from trade are created by comparative advantage. Author [40] concluded that economic activities geographically shifted in Japan because of the migration of skilled workers or entrepreneurs who are associated with the silk industry

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 5 / 23 PLOS One Trade agreement, climate change and geography after trade openness and that the different structure of the present economic geography of Japan is prejudiced toward the east. Economic activities that have shifted to the eastward ori- gin within Japan could have started at the beginning of the port era during the middle of the 19th century, which is called the “missing quarter-century.” The significance of textiles and the silk industry at domestic and international trade levels is encouraged by the specific character- istics of Japan’s economy and geography around the turn of the 19th century. The findings demonstrate that Japanese silk fabric production and skilled labor may improve when dispersed between two regions, similar to the East and the West in an autarky that is consistent with historical observations. At Autarky, firms work in western regions, although they have a disadvantage in location in terms of raw material prices because this region has large local markets. Consequently, firms located in the West exit the market and enter markets in the East that have migrant skilled workers. In the East, a new spatial equilib- rium takes place with international trade. Economic activities and mobile resources are more agglomerated in the east because of Japan’s opening up during the missing quarter-century, encouraging the economic center of production in east Japan. Nexus between CO2 emissions and trade

This strand of literature describes the correlation between carbon dioxide (CO2) emissions and trade. A substantial number of studies analyzes the effect of trade on carbon dioxide (CO2) emissions for bilateral, multilateral and region to region. For instance, [41–43] argue that trade openness upsurges the CO2 emission level. Precisely, exports contribute to growth in greenhouse emissions, however, signing the trade agreement between countries decline the influence of trade on CO2 emissions. Furthermore, imports also have positive impacts on carbon emissions, although exports cause the reduction in carbon emissions after signing the trade agreements. Subsequently, other studies also debate that trade openness cause augment the greenhouse effect in the short and long runs. Another study by [44,45] investigated the role of trade in environment, suggesting that global trade has worsened environmental pollution effects. The reason behind that trade openness upsurges the export level which causes the increase domes- tic production via expansion in scale of industries. Consequently, mass energy consumption is required to achieve the level of output and upsurged CO2 emissions through economic activ- ities. Subsequently, [46] analyze the CO2 emissions embodies in bilateral trade between Japan and China, demonstrating that trade volume has a remarkable impact on CO2 emissions in positive inclination. In the contrast, [47] argue that trade openness can have negative effects on CO2 emis- sions in OECD and industrialized countries respectively. Moreover, [48] discussed that trade

openness may drastically adversely affect pollutants, especially energy. Besides, [49,50] also investigate that trade has a reticence effect on carbon dioxide emissions in OECD countries. However, it has positive impact on emissions in non-OECD countries. Conversely, [51] argue that trade openness drastically reduces per capita CO2 emissions in Korean economy, pre- cisely, this negative relationship scale effect, technique effect and structural effect. However, mitigation effect is governed by technical effect for nexus between trade and CO2 emissions. It is worth notable that studies did not find the consistent accord on the correlation concerning the trade and CO2 emissions. Aforementioned literature emphasizes on the association between CO2 emissions and trade openness from international perspective. Meanwhile, a scanty studies has indicated that aggregate global trade cannot determine the separate effects of exports and imports on CO2 emissions [52–56]. Therefore, Hasanov et al. (2021) investigate the impact of exports and

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.

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 7 / 23 PLOS One Trade agreement, climate change and geography However, this study argues that trade agreements may be sign based on geographic factors such as distance, access to Ocean, common border and so on. Methodology Theoretical framework and model After reviewing the aforementioned literature on the effect of geographic factors on international trade, we developed a theoretical framework to estimate the influence of geographic factors on bilateral exports. A number of research studies argue that countries are giving great attention to export strategies to enhance trade volume and other economic goals. Specifically, exports are influenced by several factors, such as population, agglomeration, trade blocks, distance, and so on. However, geographic factors are the most important for bilateral exports. The reason may be that trading partners are located in different locations with diverse geographic factors. More analytically, the simultaneous effect of geographic factors may also influence bilat- eral exports, indicating that the joint effect of climate change (CO2 emissions), the ocean, and common border has a remarkable effect on bilateral export levels between the trading partners. To do so, bilateral exports as dependent variables, and geographic factors, trade agreements, and economic GDP as explanatory variables are used in the current analysis. Therefore, trade agreements also affect bilateral exports by eliminating the distortions that

create the trade effect. In contrast, the imposition of distortions on member and non-member nations of any trade block creates trade diversion. Consequently, trade can be diverted from any equilibrium position. The explanations for the variables are presented. Bilateral exports from country i to coun- try j are measured in million dollars per year. The explanatory variables are Carbon dioxide (CO2) emissions are the released emissions in tons from all sectors of the economy, such as agriculture, industry, or manufacturing sectors, per year. CO2 emissions have a remarkable effect on international trade. The reason may be that these variable influences climate change and changes the atmosphere, resulting in the firm’s decisions regarding the geographic- oriented environment or atmosphere. Consequently, the bilateral export level is enhanced between the trading partners [67]. Physical distance is defined as the distance from one place (capital to capital) in terms of a kilometer of a country, i.e., Ocean access is defined as a country that naturally has access to an ocean or sea. The common border is shared by two countries by land. These are key variables that are on the right side of equation (5). Moreover, we use proxies (e.g., CO2 emissions and physical distance) to understand the concept of natural and man-made geography, which are estimated for first-nature and second-nature geography because these are the main factors of geography. In addition, trade agreements defined as a dummy variable are included in the current

model, if two member countries sign a preferential trade agreement is equal to one, otherwise zero [68] also argues that trade agreements (i.e., preferential trade agreements) are used for trade creation effects among the member countries. A number of studies investigated the potential trade diversion effects of preferential trade agreements by using the binary variables [69]. Therefore, member countries reduce trade restrictions such as tariffs and quotas to enhance trade volume. Thus, it is expected to have a positive effect on bilateral exports. Model estimation ln EXP ln CO ln PhyDIST ln AOij ln C ijt it ij ( ) = + ( )+ ( )+ ( )+ β β β β β 0 1 2 3 4 2 BB ln GDP ln Pop ln distance tariff ij it it it ( ) + ( )+ ( )+ ( )+ + β δ δ δ ε 5 1 2 3 iit (1)

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 8 / 23 PLOS One Trade agreement, climate change and geography Equ. (1) explains that beta (β) and delta (δ) are explanatory and control variables respectively, EXPijt indicates the exports between the origin country to the destination country, CO it 2 is the carbon dioxide emissions of a country i in year t , PhyDISTit is the physical distance of a country i in year t , AOit is access to Indian or Pacific Ocean of country i in year, CBit is the common border of country i with country j in year t , GDPijt demonstrates the GDP of country i and j in year t , and Popijt is the population of the exporting countries. Distance is measured in kilometers from the capital to the capital of the trading country. Mills ratio is the coefficients of the Heckman model (1979). In addition, we extend the empirical model by adding the trade agreement and carbon dioxide emissions in the Equ. (2) to analyze the effect of simultaneous impact of trade agree- ment and carbon dioxide emissions (CO2) on bilateral exports. Thus, the empirical model is following: ln EXP ln CO ln PhyDIST ln AOij ln C ijt it ij ( ) = + ( )+ ( )+ ( )+ β β β β β 0 1 2 3 4 2 BB ln GDP PTA GDP GDP CO W ij it ijt it it ( ) + ( )+ ( )+ ( )+ ( )+ β β β β β 5 6 7 2 8 9 2 * TTOX ijt it ( )+ ε (2) Equ. (6) shows that export (s) is a function of carbon emissions (CO2), trade agreement (TDA), access to Ocean (AO), common border (CB), gross domestic product (GDP), non-

Our concern is to estimate the role of geographic factors, climate change and trade agree- ments in determining export activities at the bilateral level. The literature has demonstrated that natural geographic factors have a direct and indirect impact on international trade and infrastructure, as well as production and consumption [10,70,71]. Similarly, in man-made geography, transportation costs create economic activities in terms of adopting different strategies, such as substituting export strategies and increasing returns to scale, especially in the manufacturing sector. We employ the structural gravity model [72–74] to investigate the influence of geographic factors, climate change and trade agreements on bilateral exports for Asian countries. In the

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 9 / 23 PLOS One Trade agreement, climate change and geography contrast, several studies, e.g., [75–81] used standard gravity equations to analyze the influence of trade barriers in trade flows. Thus, this instrument is considered the most famous in foreign trade flows, such as imports and exports from origin to destination and vice versa, physical distance, economic mass (GDP), GNP, population size, culture, common language, and common border. To do so, econometric techniques have been employed, such as the Poisson Pseudo-Maximum Likeli- hood (PPML) to incorporate the issue of zero trade value in the dataset. The reason behind that some trading partners do not trade between each other such as Pakistan and Israel due to lack of diplomatic conflict or any economic and statically issue, which miss the observations [82–84] Furthermore, this approach is also used to tackle the issue of heterogeneity, which could be exist. Subsequently, fixed effect technique is used to estimate the constant or fixed relationship in the explanatory variables. Random effect analyses the data to evaluate certain factors which casually affect the outcomes across the individual or groups. Afterward, Iterative reweighted least squares and quantile regression are used to correct the robustness check. The reason behind that extreme values can create biasness in the analysis process. Empirical results Descriptive statistics. The descriptive statistics is analzyed in the Table 2 for measuring

the central tendency, rationality and effective technique. Analysis shows that the observations are almost closed to their means for each variable, suggesting that the variation is found moderate. For instance, the logarithm means and S.D values of the variable export are 6.045 and 6.774 respectively, subsequently, the logarithm means and S.D values of distance are 3.612 and 3.366, which indicate that lowest variation is existed. However, the CO2, Pop, and GDP variables have difference between mean and S.D values, indicating that there is some variation in these observations. Besides, there are much differences between maximum and minimum values for the variable’s exports, CO2, distance, population and GDP over time. Empirical analysis. We use different econometric techniques to incorporate the influence of geographic factors on bilateral exports. Table 3 reveals the estimates of PPML, OLS, FE, and RE on domestic and partner geographic factors in bilateral exports. The findings indicate that geographic factors have a positive impact on bilateral exports. The domestic log of CO2 Table 1. Variables and data source. Variable Measure Code Source Exports Ratio of export value to export price index EXP UNC- TAD Distance Kilometre from capital to capital Dist CEPII Tariff Weighted mean for all product in term of percentage TRF WDI Access to Ocean access to Indian or Pacific Ocean that defined as the equal to 1 if a country has access to Indian or the Pacific Ocean otherwise zero. AC CEPII

Common border Dummy variable, 1, if a country shared border with its trading partner, otherwise zero CB CEPII Carbon dioxide emissions Measured in tons released from all sectors CO2 WIOD Population Total population measured in million Pop WDI Gross domestic product Gross domestic product measured in billion US dollar GDP WDI Preferential trade agreement if exporter and importer listed were in any one of PTA’s listed either the WTO website PTA WTO WTOX four-dimensional (dummy) variable with 0 or 1 for each WTOX provision. WTOX WTO Source: author’s calculations. https://doi.org/10.1371/journal.pone.0320363.t001

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 10 / 23 PLOS One Trade agreement, climate change and geography declined below the export level and significantly increased under FE and RE. Comparatively, the importing’ log of CO2 is a positive inclination factor for bilateral export levels except under OLS. CO2 has a high magnitude for importing countries than exporting countries. Both coun- tries substantially contribute to determining bilateral exports. Subsequently, physical distance is found to be a statistically significant factor with high magnitudes. Geographic factors from exporting countries have a greater impact than importing countries. The findings show that geographic factors for exporting countries influenced bilateral exports by 72.2% more than importing countries. By controlling the country-specific effect, bilateral exports are increased by 22.6% because of the margin of countries. Therefore, domestic physical distance has a stronger effect than physical distance and CO2. The author [85,86] found that the firm’s deci- sions about movement are made based on the specific location where high demand market size exists after decreasing transportation costs. Supplementary natural geographic factors, such as access to the ocean and common bor- ders, significantly influence the export level. Bilateral exports are enhanced because of a high contribution of access to the ocean from the importing country’s countryside, resulting in high magnitudes. Countries that have access to the ocean benefit during trading of products

through air infrastructure. However, exporter geographical countries are also geographically benefitting because they have a common border. Having a common border reduces trade costs through bilateral infrastructure [67]. The outcomes from PPML indicate that explan- atory variables have remarkable impact on exports. The estimation is consistent rather than traditional OLS, fixed and random effect. The reason behind that this technique incorporates the zero trade issues in bilateral exports. More precisely, some trading partners do not report or trade between each other such as Pakistan and Israel due to diplomatic conflicts. Thus, zero trade issues is occurred. Empirical evidence shows that a 1% increase in CO2 upsurges exports by 10.2%. The reason may behind that extreme weather stimulates production of dissimi- lar products, which are transported from/to multiple locations based on environment. The coefficient of distance is negatively correlated with exports, 76.2% decrease in exports is due to a one-unit change in distance. Likewise, rest of the trade barriers are also found negative correlated with exports and statistically significant at 1% and 5% levels. Our main concern is the simultaneous impact of geographic factors on bilateral exports, reported in Table 4. We perform a two-stage sample selection [37]. Columns (1)–(4) indicate domestic geographic estimates, whereas Columns (5)–(8) indicate importing geographic estimates. Table 2. Central Tendency. Variable Obs Mean S.D Min Max Exports 44436 6.045 6.774 3.000 8.210

Distance 44436 3.612 3.366 1.856 4.040 Tariff 44436 0.892 0.753 -1.523 1.574 Access to Ocean 44436 0.215 0.312 0.000 1.000 Common border 44436 0.248 0.305 0.000 1.000 CO2 44436 5.505 6.029 2.208 7.013 Population 44436 7.960 8.412 5.458 9.143 GDP 44436 11.601 12.076 6.909 13.049 PTA 44436 0.210 0.012 0.000 1.000 WTOX 44436 0.010 0.032 0.000 1.000 Note: all variables are transferred into logarithm. https://doi.org/10.1371/journal.pone.0320363.t002

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 11 / 23 PLOS One Trade agreement, climate change and geography The findings exhibit that exporting countries’ CO2 has a higher impact on bilateral export levels and probability than the importing country’s geography. Similarly, exporting countries’ physical distance has significantly impacted bilateral exports under outcome and selection equations. The export level and its probability are declined, resulting in the negative simultaneous impact of geography and the GDP. The marginal export level of exporting county’s CO2 has a positive impact by 247.6% and is greater than importing countries’ geography, conditionally varying the GDP level. Similarly, the marginal export probability of exporting country’s CO2 also has a positive impact of approximately 191.6% more than that of importing countries. Furthermore, the marginal export level and the marginal probability of physical distance are highly affected by approximately 264.09%, 204.56%, 14.494%, and 93.04% for both exporting and importing countries’ geography due to GDP. On conversely, [87] argue that trade is a benign effective factor for the environment in the short-run but harmful in the long-run. Moreover, CO2 emissions are negatively affected by urbanization in the short and long run. However, we find that the simultaneous impact of geographic factors has negative coefficients under outcome and selection equations. The complementary of CO2 and physical distance strongly impact the decline of the export level

and probability between trading countries. Table 3. Regression analysis. Exporting countries Importing countries ___-Estimation PPML OLS Fixed Effect Random Effect PPML OLS Fixed Effect Random Effect (1) (2) (3) (4) (1) (2) (3) (4) VARIABLES Dependent variable: exports CO2 0.102 * 0.020 -0.287 0.132 0.091*** 0.068 0.085** 0.084** (0.021) (0.054) (1.119) (0.477) (0.021) (0.058) (0.040) (0.040) Physical-distance 0.671** 0.859*** 0.414*** 0.525*** 0.541** 0.127*** 0.188*** 0.187*** (0.012) (0.016) (0.082) (0.072) (0.021) (0.018) (0.012) (0.012) Lndistance -0.762*** -0.840*** -0.857*** -0.858*** -0.671** -0.994*** -1.241*** -1.239*** (0.001) (0.030) (0.021) (0.029) (0.020) (0.031) (0.023) (0.024) Access to Ocean 0.201** 0.751*** – 0.622 0.210*** 3.006*** – 3.048*** (0.021) (0.044) – (0.386) (0.027) (0.039) – (0.404) Common border 0.021*** 2.416*** 2.609*** 2.606*** 0.032*** 2.248*** 1.501*** 1.506*** (0.091) (0.075) (0.082) (0.081) (0.032) (0.080) (0.066) (0.066) Lngdp 0.329** 0.281*** 0.429*** 0.445*** 0.450*** 0.644*** 0.582*** 0.582*** (0.017) (0.016) (0.041) (0.037) (0.030) (0.018) (0.013) (0.013) lntariff -0.039** -0.366*** -0.257*** -0.266*** -0.023*** -0.358*** -0.379*** -0.379*** (0.061) (0.022) (0.052) (0.051) (0.032) (0.023) (0.018) (0.017) lnpop 0.035*** 0.046*** 0.771*** 0.324*** 0.045*** 0.267*** 0.303*** 0.303*** (0.013) (0.016) (0.174) (0.103) (0.054) (0.015) (0.013) (0.011)

Constant 1.203** -1.818** -8.564 -8.226 1.4321** -5.726*** -3.407*** -5.266*** (0.021) (0.718) (13.700) (6.104) (0.042) (0.757) (0.542) (0.628) Observations 44436 44436 44436 44436 44344 44436 44436 44436 R-squared 0.405 0.104 – 0.349 0.426 – Number of exporters 46 – 46 46 46 – 46 46 Country effect Yes – – – Yes – – – Time effect Yes – – – Yes – – – Note: the term ***, ** and * denote that significance level at 1%, 5% and 10% respectively. Ln indicates logarithm for variables. https://doi.org/10.1371/journal.pone.0320363.t003

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 12 / 23 PLOS One Trade agreement, climate change and geography The authors [39] also documented their findings, the geographic structure of Ricard- ian into the general equilibrium, and the proposed simple structural equations for bilateral trade, which are relevant to absolute and comparative advantages and geographical barriers for trade. However, they did not cover the geographic aspect as we did. The marginal export level and the marginal probability of emissions are found significant and positive concerning physical distance. Similarly, the marginal export level and the marginal export probability of physical distance have a positive impact, which is less than domestic geography. Variables such as access to an ocean and a common border have a significant and strong impact on bilateral exports and their probability among the Asian countries. For instance, Central Asia, West Asia, and South Asia, excluding Sri Lanka, the Maldives, China, and Russia, have more common borders and access to an ocean. The study concluded that all geographic factors and the GDP are complementary to one another in determining the export level and its probability between trading partner countries under both dimensions. Table 4. Simultaneous Effects of Geographical Factors on Asian’s Bilateral Exports. Location Exporting Countries Importing Countries Estimation GDP Interaction Geographical Interaction GDP Interaction Geographical Interaction (1) (2) (3) (4) (5) (6) (7) (8) Dependent Variable: Exportijt

CO2 5.281** 4.033*** 4.372*** 2.755*** -0.348 0.858 1.554** 0.494 * (2.437) (0.695) (1.276) (0.316) (1.132) (0.626) (0.638) (0.276) Physical-distance 0.969 * 0.794*** 4.498*** 3.024*** 0.102 0.539*** 1.333** 0.519 * (0.512) (0.0879) (1.342) (0.332) (0.230) (0.0744) (0.650) (0.288) Lndistance -0.254*** -0.120*** -0.265*** -0.125*** -0.394*** -0.193*** -0.472*** -0.201*** (0.062) (0.016) (0.051) (0.016) (0.057) (0.016) (0.053) (0.016) Access to Ocean 1.168*** 0.641*** 1.218*** 0.658*** 1.769*** 1.447*** 2.346*** 1.460*** (0.310) (0.033) (0.231) (0.033) (0.421) (0.032) (0.364) (0.032) Common Border 0.425 0.634*** 0.437** 0.619*** 0.175 0.607*** 0.397*** 0.573*** (0.275) (0.040) (0.195) (0.039) (0.168) (0.039) (0.141) (0.039) LnGDP 2.659** 2.062*** 0.215*** 0.089*** 0.147 0.951*** 0.586*** 0.340*** (1.246) (0.327) (0.043) (0.014) (0.608) (0.294) (0.087) (0.013) Lntariff -0.050*** -0.032*** -0.052*** -0.033*** -0.025*** -0.018*** -0.031*** -0.017*** (0.016) (0.002) (0.011) (0.002) (0.005) (0.002) (0.005) (0.002) Lnpopulation -0.202*** -0.086*** -0.223*** -0.095*** 0.044** 0.056*** 0.056*** 0.039*** (0.044) (0.010) (0.038) (0.010) (0.021) (0.009) (0.017) (0.009) CO2 * GDP -0.183** -0.146*** 0.025 -0.030 (0.089) (0.026) (0.043) (0.024) PhyDist*GDP -0.018 -0.016*** -0.002 -0.020*** (0.013) (0.003) (0.008) (0.002) CO2 * PhyDist -0.325*** -0.217*** -0.105** -0.041 * (0.102) (0.026) (0.053) (0.023) Lambda 1.314** 1.377*** 0.755** 1.292***

(0.603) (0.430) (0.380) (0.323) Constant -63.360 * -59.750*** -46.940*** -39.170*** 6.944 -26.900*** -20.560** -16.190*** (35.420) (8.544) (17.380) (3.905) (16.390) (7.590) (9.317) (3.410) Observations 44436 44436 44436 44436 44436 44436 44436 44436 Note: the term ***, ** and * denote that significance level at 1%, 5% and 10% respectively. Ln indicates logarithm for variables. https://doi.org/10.1371/journal.pone.0320363.t004

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 13 / 23 PLOS One Trade agreement, climate change and geography The estimates of the structure gravity model and multilateral resistance terms for geo- graphical factors are reported in Table 5. We perform the structure gravity model and the two-stage sample selection [37] to examine the influence of trade barriers and the correlation of unobserved variables among the explanatory and error terms, respectively. The gravity variable, distance, is found with a negative and significant magnitude that reduces the export level in both dimensions (domestic and partners), but the partner countries’ distance is greatly affected compared with that of the domestic country. The main geographic factors have a significant influence on the bilateral export level and its probability. During bilateral exports, access to an ocean is found to have a greater impact on exports in the importing country’s geography than the exporting country’s geography. Access to an ocean and common border geographical factors also positively influence the bilateral exports between trading partner countries. The country characteristic variables, such as population, decline in the export level and probability in exporter countries but increase in Table 5. A Structural Gravity with Trade Agreement and CO2 Emissions. Exporting Countries Model Importing Counties Model Variable Linear Non-linear Interaction Linear Non-linear Interaction CO2 -0.250 0.176** 0.117*** 0.132 0.152*** 0.169**

(0.045) (0.051) (0.054) (0.110) (0.041) (0.021) Physical-distance -0.125*** -0.130*** -0.228*** -0.186*** -0.179*** 0.140*** (0.001) (0.020) (0.009) (0.003) (0.001) (0.007) Access to Ocean 0.151*** 0.321** 0.622 * 1.006*** 0.153*** 0.108*** (0.001) (0.021) (0.086) (0.002) (0.002) (0.030) Common border 0.627*** 0.017 * 0.142*** 0.197*** 0.104*** 0.054*** (0.011) (0.014) (0.030) (0.080) (0.032) (0.031) LnGDP 0.107*** 0.132** 0.121*** 0.372*** 0.032 * 0.043*** (0.001) (0.032) (0.032) (0.102) (0.021) (0.032) PTA 0.114*** 0.204*** 0.109*** 0.140*** 0.128*** 0.157*** (0.001) (0.023) (0.011) (0.015) (0.036) (0.011) CPM 0.242** – – 0.312*** – – (0.002) – – (0.001) – – CPP 0.111*** – – 0.091*** – – (0.020) – – (0.031) – LMB – 0.190** – – 0.173*** – – (0.004) – – (0.023) – EVS – – 0.201*** – – 0.131*** – (0.010) – – (0.004) GDP2 – 0.102*** – – 0.104*** – – (0.030) – – (0.020) – GDP*CO2 – – -0.035*** – – -0.013*** – – (1.070) – – (0.051) Constant 1.971*** 0.564** 0.126** 0.486 * 0.214 0.127*** (0.047) (0.070) (0.100) (0.028) (0.041) (0.308) R-squared 0.145 0.104 – 0.449 – – Number of exporters – 46 46 – 46 46 Note: the term ***, ** and * denote that significance level at 1%, 5% and 10% respectively. Ln indicates logarithm for variables. https://doi.org/10.1371/journal.pone.0320363.t005

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 14 / 23 PLOS One Trade agreement, climate change and geography importer countries. The remoteness in exporter countries seems with higher magnitudes that cause a reduction in the export level and probability than importer countries. More interestingly, the effect of a trade agreement is also investigated on bilateral exports along with the non-linear and simultaneous effect of economic GDP. The outcomes are reported in Table 6. A trade agreement has a remarkable impact on bilateral exports between the trading partners. More specifically, trade agreements provide trading partners with ben- efits in the form of nominal (i.e., tariff) or quantity (i.e., imposing quantity restrictions). The outcomes reveal that a 1% increase in PTA upsurges bilateral exports by 11.4% in the case of domestic geographic countries. On the contrary, 14% of bilateral exports are increased due to a 1% change in trade agreements for the partner geographic countries (importers). This suggests that trade agreements between the trading partners reduce the tariff or enhance export quantity. Consequently, bilateral exports have increased over time. However, trade agreements are diverse in nature, which can have a substantial impact on bilateral exports due to different trade mechanisms. Furthermore, trade agreements are considered based on a geographic-oriented environment where production and consumption have contrarily Table 6. Structural Gravity Model. Exporting Countries Importing Countries (1) (2) (3) (4) (5) (6)