Greener Trade Agreements and Green Transformation

Abstract This study investigated the impact of environmental provisions in preferential trade agreements on the greening of Chinese firms' exports using data from the Trade and Environment Database, the Chinese Customs Database, and the Annual Survey of Industrial Firms for 2000–2014. These provisions significantly boosted firms' shares of clean exports and reduced shares of dirty exports. Pollution intensity weakened this effect but productivity strengthened it. Heterogeneity tests indicated stronger effects for technology‐related provisions than trade‐related ones, and more pronounced impacts on domestic firms and those located in regions with advanced green innovation capacity and environmental governance. The study extended the trade effects of environmental provisions in preferential trade agreements to the micro level and offered novel evidence for the Porter hypothesis in the context of international environmental regulation. It also provided empirical support for China's efforts to promote the greening of trade.