Effects of Environmental Technical Barriers to Trade on Trade Performance: A Panel VAR Assessment

Environmental Technical Barriers to Trade (TBTs), including climate change-related regulations, standards, and conformity assessments, have emerged as increasingly influential non-tariff measures in international trade. This paper quantifies the impact of environmental TBT on trade performance using a Panel Vector Autoregressive (P-VAR) model based on data from 36 OECD countries over the period 2009–2022. The empirical framework accounts for long-run cointegration, Granger causality, and dynamic interdependence through impulse response analysis. The results show that environmental TBTs tend to enhance trade in high-technology and high-income contexts, where strong institutional and certification capacities enable firms to turn regulatory compliance into competitiveness gains. By contrast, the effects are weaker or insignificant in economies with lower technological and institutional capacity, where environmental standards often act as market access barriers. These findings highlight the heterogeneous and conditional nature of environmental TBTs, suggesting that their trade impact depends on a country’s level of technological readiness, income, and regulatory capability.