Carbon leakage in international trade



The Kyoto Protocol, which entered into force in February 2005, aims to reduce the greenhouse gas (GHG) emissions of the signatory countries. Nine years later, it is clear that this agreement has been unsuccessful in curbing GHG production. One reason could be the "carbon leakage" resulting from international trade.

Jie He, a researcher with the Department of Economics at Université de Sherbrooke, examined this issue by analyzing the environmental burden shifting within the Canada–China–USA trade triangle. By observing bilateral trade relations between Canada, China and other countries such as the USA, she showed that outsourcing production to China results in a global increase in GHG emissions, due to the fact that production methods in China are still five to ten times more polluting than those in western countries.

China produces more emissions to manufacture the same product and global GHG emissions increase.

While a country such as Canada can reduce its own GHG emissions by outsourcing production to China, China produces more emissions to manufacture the same product and global GHG emissions increase. This example helps to illustrate the complexity of the fight against climate change.

Jie He's work has been published in several scientific journals including Ecological Economics, Journal of International Trade and Economic Development, L'Actualité économique and Journal of Environmental Economics and Policy, and is the subject of a chapter in the multi-authored volume The Chinese Economy in the Next Three Decades. Jie He has also presented her results at conferences in Québec, China and France.