A debate over environmental policies and trade competitiveness, “Do environmental policies really matter to impact trade competitiveness?” still exists during the past decade. The thesis aims at investigating the impact of WTO-EU environmental policies for the international olive oil market on production and export competitiveness of developing countries. In particular, we focus our analysis on the agro-industrial sector in the Arab countries, and we take specific reference to the case of the olive oil agro-industrial sector in Syria. In the frame of a partial equilibrium trade model, we incorporate the “end-of-the-pipe” environmental policies which in turn enhance the productivity of the polluting input. Moreover, a part of the burden of environmental compliance may be shifted onto foreign consumers. The most novel part of our model consists of the augmented effect of compliance with environmental policies, which includes not only the standard impact on the effective product price, but also on the input shadow price. The empirical findings, based on Syrian data, provide strong support to the Porter Hypothesis and its application to international markets for agro-industrial products. Accordingly, the study disproves the legitimacy of concerns that stricter environmental policies in developing economies may have negative impacts on their production and export competitiveness. In contrast, our results show that compliance with environmental policies under the large country assumption has positive effects on their international competitiveness of environmentally sensitive sectors, in particular. Therefore, the policy implications suggest the implementation of strict environmental regulatory policies supporting environmentally sound technologies.

A debate over environmental policies and trade competitiveness, “Do environmental policies really matter to impact trade competitiveness?” still exists during the past decade. The thesis aims at investigating the impact of WTO-EU environmental policies for the international olive oil market on production and export competitiveness of developing countries. In particular, we focus our analysis on the agro-industrial sector in the Arab countries, and we take specific reference to the case of the olive oil agro-industrial sector in Syria. In the frame of a partial equilibrium trade model, we incorporate the “end-of-the-pipe” environmental policies which in turn enhance the productivity of the polluting input. Moreover, a part of the burden of environmental compliance may be shifted onto foreign consumers. The most novel part of our model consists of the augmented effect of compliance with environmental policies, which includes not only the standard impact on the effective product price, but also on the input shadow price. The empirical findings, based on Syrian data, provide strong support to the Porter Hypothesis and its application to international markets for agro-industrial products. Accordingly, the study disproves the legitimacy of concerns that stricter environmental policies in developing economies may have negative impacts on their production and export competitiveness. In contrast, our results show that compliance with environmental policies under the large country assumption has positive effects on their international competitiveness of environmentally sensitive sectors, in particular. Therefore, the policy implications suggest the implementation of strict environmental regulatory policies supporting environmentally sound technologies.