Free Trade and the Formation of Environmental Policy: Evidence from US Legislative Votes

We test the hypothesis that governments alter environmental policy in response to trade by studying NAFTA’s effects on the formation of environmental policy in the US House of Representatives between 1990 and 2000. We find that reductions in US tariffs decreased political support for environmental legislation. This decrease appears to be due to (i) a reduction in support by incumbent Republican legislators in response to trade-induced changes in the policy preferences of their constituents and (ii) changes in partisan representation in affected districts due to decreased electoral support for pro-NAFTA Democrats following the agreement. (JEL D72, F13, F15, F18, Q56, Q58)