Environmental Impacts of the ASEAN-China Free Trade Agreement on the Greater Mekong Sub-Region

The report assesses how the ASEAN-China Free Trade Agreement (ACFTA) has influenced trade flows and environmental quality in the Greater Mekong Sub-region (GMS). Using a trade-environment matrix, the authors find that while two-thirds of trade is in low-pollution sectors, a third is in highly polluting sectors, with China as the primary producer of these goods. In Cambodia, the agreement has increased imports of polluting goods from China, which the authors describe as an environmental 'gain' for Cambodia at the expense of China's environment. However, the report highlights severe risks of natural resource depletion in Cambodia, specifically deforestation driven by wood and rubber exports, and overfishing. The authors conclude that the ACFTA lacks environmental provisions, which is a significant shortcoming in regional economic policy.

• Trade between China and the GMS5 countries (Cambodia, Lao PDR, Myanmar, Thailand, and Vietnam) increased significantly following the ACFTA, particularly for goods with reduced tariffs.
• Approximately one-third of the trade volume between China and the GMS5 countries consists of products from the most polluting sectors, defined as those emitting more than 1,500 pounds of total toxic pollution per million USD of production.
• Cambodia has experienced an environmental 'gain' by importing highly polluting goods from China, effectively shifting the pollution intensity of those products to China.
• Increased trade in wood and wood products is a primary driver of deforestation in Cambodia, where forest cover dropped from 73 per cent in 1965 to approximately 50 per cent in recent years.
• The expansion of rubber production to meet Chinese demand threatens further deforestation in Cambodia's northeastern provinces, including Kompong Cham, Kratie, Mondolkiri, and Ratanakiri.
• Trade opportunities for fish products in China may lead to overfishing and the use of illegal fishing methods, threatening the livelihoods of approximately 40 per cent of Cambodia's population.
• The ACFTA is criticized for its lack of environmental provisions, and while other GMS frameworks like the Core Environment Program (CEP) exist, they are not specifically linked to trade.
• Cambodian exporters of agricultural goods have been unable to fully utilize ACFTA preferential tariffs due to a lack of laboratory facilities and technical staff required for Sanitary and Phytosanitary Standards (SPS) certificates.
• Implementation of Cambodia's National Environmental Action Plan (NEAP) is hindered by budget shortages, lack of skilled staff, and overlapping agency functions.

APA

Vutha, H., & Jalilian, H. (2008). Environmental Impacts of the ASEAN-China Free Trade Agreement on the Greater Mekong Sub-Region. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/tkn_enviro_impacts_china.pdf

Chicago

Vutha, Hing, and Hossein Jalilian. Environmental Impacts of the ASEAN-China Free Trade Agreement on the Greater Mekong Sub-Region. International Institute for Sustainable Development, 2008. https://www.iisd.org/system/files/publications/tkn_enviro_impacts_china.pdf.

Wikipedia

{{cite report |last1=Vutha |first1=Hing |last2=Jalilian |first2=Hossein |title=Environmental Impacts of the ASEAN-China Free Trade Agreement on the Greater Mekong Sub-Region |publisher=International Institute for Sustainable Development |date=September 2008 |url=https://www.iisd.org/system/files/publications/tkn_enviro_impacts_china.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vutha2008environmental, author = {Vutha, Hing and Jalilian, Hossein}, title = {{Environmental Impacts of the ASEAN-China Free Trade Agreement on the Greater Mekong Sub-Region}}, institution = {International Institute for Sustainable Development}, year = {2008}, month = sep, url = {https://www.iisd.org/system/files/publications/tkn_enviro_impacts_china.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }