Do environmental provisions in regional trade agreements affect trade in services?

Liberalization of services trade through regional trade agreements (RTAs) represent a significant environmental concern where more and more RTAs include environmental provisions. Do environmental provisions in RTAs improve or undermine trade between member countries? I investigate the unexplored relationship between the number of environmental provisions concluded by trading partners and RTAs on services trade. I focus on three main European trade agreements concerning services: the European Economic Area (1994), the European Union (1995) and the European Free Trade Association (2002). A theory-based and robust gravity model specification including lagged terms is used with sectoral disaggregation for services trade on the 1981-2010 period. The results underline the statistically significant effect of environmental provisions in RTAs covering services on trade with a higher magnitude for deeper environmental provisions. Different trade impacts also appear between these European RTAs across sector-specific services trade and according to the depth of the environmental provisions.