Economic and Environmental Effects of Iran-Eurasian Economic Union Trade Agreement: GDyn-E Approach

Subject Areas : Environmental Economics

yaser balaghi enalou ¹ , Mehdi Nejati ² , Mojtaba Bahmani ³ , Sayyed Abdolmajid Jalaee Esfandabadi ⁴

1 - PhD Student in Economics, Department of Economics, Shahid Bahonar university of Kerman, Kerman, Iran. *(Corresponding Authors)
2 - Associate Professor, Department of Economics, Shahid Bahonar university of Kerman, Kerman, Iran.
3 - Associate Professor, Department of Economics, Shahid Bahonar university of Kerman, Kerman, Iran.
4 - Professor, Department of Economics, Shahid Bahonar university of Kerman, Kerman, Iran.

Received: 2021-06-17 Accepted : 2022-10-27 Published : 2023-03-21

Keywords: Trade Liberalization, Dynamic Energy-Based Global Trade Analysis Project, Environmental quality, Eurasian Economic Union,

Abstract :

Background & Objective: The economic and environmental consequences of trade release and free trade agreements have always been discussed. In this regard, in this study, the economic and environmental impacts of decreasing the import tariffs of Iran and the Eurasia Economic Union have been analyzed in a 25-year long run horizon.Material and Methodology: In this study, empirical analysis and quantification of the results is in terms of the model of dynamic energy-driven global trade analysis (GDyn-E), noted model is a computable general equilibrium model (CGE), global and multi-regional. Regarding the international nature of the analysis of this study, a global pattern and database was required to achieve the purposes of this study; therefore, GDyn-E model and version 10 of its database (published in 2020) were chosen for analysis, this database covers the entire world. In this study, the economic and environmental impacts of Iran-Eurasia free trade agreements were analyzed by RunDynam software in two scenarios (50% decrease and 100% decreasein tariff rates).Findings: This study's resultsindicate that with the decrease of bilateral tariffs, the total CO2 emissions in Iran are increasing and by increasing commercial releasedegree, the volume of CO2 emissions increases and the total CO2 emissions in Eurasia have a decreasing trend and by increasing commercial releasedegree, the volume of CO2 emissions reduces. The results of this researchrelated to the economic welfare and production indicate that with the decrease of trade tariffs, welfare and production in Iran has an increasing trend and also welfare and production in the Eurasian Economic Union indicate an increasing and decreasing trend, respectively. The trend of the impact of technique (technology) in Iran is descending and in the Eurasian Economic Union is ascending, the impact of the technique shows a change in production technology, especially the shift towards clean technology. By commercial release, the impact of technology in Iran has resulted in an increase in environmental degradation, and in the Eurasian Economic Union, it decreases environmental degradation, proposing that the Eurasian Economic Union is moving towards clean technology and clean technologies have not been applied in Iran, and one of the reasons could be in terms of the lack of strict environmental laws in Iran.Discussion and conclusion: It is recommended that along with decreasing trade tariffs and using other provisions related to the agreement, applying tougher environmental laws as well as applying clean technologies and the transfer of this kind of technology to the country must be on the agenda. 

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