Empirical Analysis On The Effects Of The European Union Environmental Regulation On Trade Between China And The European Union

In the rapid development of economic globalization era, people are no longersimply the pursuit of the maximization of economic and trade interests, but pay moreattention to the coordination of the environmental protection and development ofeconomy and trade. Therefore, the world reached a series of environmental treaties. Ascountries environmental protection policy implemented step by step, make environmentalregulation influence on the international trade increasingly significant. The influences ofenvironmental regulation on a nation produce different effect based on the scale of acountry to participate in the international trade. So a country in order to deal withenvironmental regulation set policy according to the situation of a country is differentand different. For China such a big international trade partner, foreign environmentalregulation on our import and export trade influence cannot be ignored.China and the EU are two important economies in the world. The EU is the world’slargest regional economic Union, China is the largest developing country in the world,while the EU is China’s largest trading partner, the exporting country and the secondlargest source of imports, China-EU trade is essential for the development of China’strade. EU Environmental Regulation on the development of China-EU trade generatedvery significance.This article through the establishment of empirical model with the measure of thetime series, ably add the environmental regulation quantification into empirical model,with the implementation of environmental regulation policy in the European Union themost significant effect in recent years as the research object, analyzed the influence ofEU environmental regulation on China and the European Union industrial bilateral tradeflow during1992-2009.The body of the paper is divided into four main sections. The firstpart is to study the theory of the impact of environmental regulation on the trade. Thesecond parts are mainly on the background, described current situation of EUenvironmental regulation, detailed environmental regulation system of the EU at thisstage and future trends.The third part is an empirical model and empirical analysis thusconcluded. Finally, the fourth sections through the above conclusions analyzed policy proposals. This paper establishes three empirical models, introduced of environmentalregulation of endogenous and exogenous two variables, study the impact ofenvironmental regulation on the total volume of trade, trade exports degree and foreigndirect investment in China. And thus a more comprehensive empirical impact ofenvironmental regulation on trade, and reached the following conclusions:(1)EU is the more stringent environmental regulation in China, the greater the totaltrade between China and the EU. Increasingly stringent EU environmental regulation notonly does not hinder the China-EU trade volume but to promote the growth of tradevolume.(2) EU is the more stringent environmental regulation in China, the greater the totaltrade between China and the EU. EU is the more stringent environmental regulation inChina, the greater the total trade between China and the EU. The results suggest that theEU’s strict environmental regulation makes China’s exports to the EU’s industrialcompetitiveness enhancement, environmental regulation, trade cost effect dominates.(3) EU is the more stringent environmental regulation in China, more and moreforeign net direct investment to China. Concluded that the reason will produce the firsttwo conclusions, because the developed countries on China’s industrial transfer. This hasto a certain extent, to verify the "pollution haven" argument.In accordance with the conclusions of the empirical analysis above, we put forwardpolicy recommendations: strengthen environmental institution building, strictenvironmental standards, adjusting the industrial structure, actively building the perfectindustry self-regulatory organizations.