How International Trade and Global Value Chains Reshape Environmental Sustainability

The expansion of international trade and global value chains has transformed the geographical organization of production while redistributing environmental pressures across countries, sectors and stages of production. This paper examines the relationship between trade integration, global value-chain participation and environmental sustainability through three complementary dimensions. First, it considers how trade liberalization affects pollution, embodied carbon, natural-resource use, water pressures and biodiversity through scale, composition and technique effects. Second, it examines the environmental consequences of global value-chain participation, focusing on value-chain position, technological upgrading, supplier capabilities, lead-firm governance and multi-tier sustainability management. Third, it considers the institutional mechanisms through which trade policy can contribute to environmental governance, including environmental provisions in trade agreements, carbon border adjustment mechanisms and trade in environmental goods. The literature indicates that international integration does not produce a uniform environmental outcome. Trade can expand production and shift ecological pressures across borders, but it can also promote cleaner technologies, productivity improvements and environmental upgrading when appropriate regulatory, technological and organizational conditions are present. Sustainable globalization therefore depends on the interaction between trade policies, domestic environmental regulation, value-chain governance, technological capacity and international cooperation. Environmental policy must consequently address both territorial emissions and the ecological pressures embodied in internationally fragmented production and consumption networks.