ENTICE: D1.3 – State of the art of TCI economic theory, political science, economic modelling

This deliverable synthesizes the state of the art on the trade–climate–industry (TCI) nexus for ENTICE WP1 across three strands: (i) economics of trade and the environment; (ii) political science on governance of climate, industrial policy, competitiveness and trade; and (iii) the representation of trade policy in modelling. Using a systematic protocol (Web of Science/Scopus searches, PRISMA-style documentation, shared codebook, Taguette), we screened ~3,881 economics and ~3,608 political-science records to core sets of ~193 and ~165 articles, respectively; a targeted modelling scan retained ~147 recent papers. Economics findings, organized by the scale–composition–technique (CST) framework, show scale effects raise emissions, composition effects are modest and heterogeneous, and technique effects (regulation, innovation, diffusion) generally dominate, yielding declining emission intensities. Evidence on the Pollution Haven/Halo and Porter hypotheses is mixed and context-dependent; Environmental Kuznets Curve patterns are not universal. Global value chains complicate production- versus consumption-based responsibility. Political science maps enabling and constraining governance themes: carbon leakage and competitiveness; carbon pricing and trade; border carbon adjustments; green industrial subsidies; North–South equity; embodied-emissions accounting; WTO compatibility; environmental provisions in trade agreements; and climate clubs/minilateral cooperation. These raise design, legitimacy and fairness considerations for climate-compatible trade policy. Modelling evidence shows CGE models (often GTAP-based) predominate; most adopt Armington trade, neglect firm heterogeneity, and treat technological change exogenously – limiting analysis of instruments such as BCAs and green subsidies. The report highlights priorities for ENTICE: better integration of policy instruments, GVC/transport channels, endogenous innovation, and producer–consumer responsibility into modelling to inform coherent trade-climate policy design.