The international community has acknowledged that international trade can be an effective means of helping to achieve the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). Traditionally, preferential trade agreements (PTAs) were designed to promote trade flows. PTAs have become more comprehensive and now also cover non-economic policy areas, such as the environment. This chapter examines whether the inclusion of environmental provisions in PTAs changes the observed overall positive contribution that PTAs make to economic outcomes and thereby to the economic objectives of the SDGs. Specifically, we ask whether the inclusion of environmental provisions in PTAs reduces export flows between PTA partner countries. Using a novel data set on environmental provisions in PTAs, we estimate gravity type panel regressions. We find that membership in PTAs including more environmental provisions is associated with less trade among trade partners compared to PTAs that include less or no environmental provisions. This negative effect of environmental provisions is fully driven by the negative effect on South–North trade flows, i.e. exports from developing to high-income countries.

Preferential trade agreements (PTAs) cover a much wider diversity of environmental clauses than World Trade Organization (WTO) agreements. Which PTA environmental clauses could be multilateralized and included in the WTO rulebook? This chapter compares five different scenarios for the potential multilateralization of PTA environmental clauses: (1) The “routine scenario” combines the most frequent clauses, (2) the “consensual scenario” includes the clauses accepted by a high number of WTO members, (3) the “trendy scenario” includes the most popular clauses in recent times, (4) “the power-game scenario” combines the clauses that are jointly supported by the United States and the European Union, and (5) the “appropriate scenario” is a compilation of the clauses typically included in large membership agreements. This chapter compares and contrasts the implications of each scenario and identifies their common ground. Although each scenario represents an ideal type unlikely to materialize, the comparison offers insights into how the multilateral trading system could be developed to improve the integration of environmental concerns.

INTRODUCTION

China's rise as an economic player is causing significant power shifts in the world economy. Its strength as a low-cost manufacturer helps to supply global markets with cheap products and simultaneously increases the global demand for commodities. This growing economic presence – in accordance with the classical argument by Paul Kennedy on The Rise and Fall of the Great Powers – consequentially augments China's political influence in international relations.

A phenomenon demonstrating China's economic rise is its growing outward foreign direct investments (FDIs). They have recently been widely discussed in the literature as part of a larger trend of developing countries' emergence as sources of investments. Less visible in the literature is a second trend, namely Beijing's growing acceptance of international investment agreements as legal instruments for the protection of FDIs. Most notably, China has been negotiating bilateral investment treaties (BITs) since the end of the 1990s that include far-reaching substantive and procedural investment protection. This new policy was a turning away from China's traditional stance toward international investment law that accentuated the host country's sovereign right to regulate foreign investments – a policy typical for FDI-importing countries. Nowadays China is demonstrating new confidence as an actor of importance in the global governance system for FDI, shown by its willingness to engage in BIT negotiations with the United States.

Against this background, this chapter empirically investigates the evolution of China's BIT policy since the early 1980s.