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

This report analyzes the environmental impacts of the ASEAN-China Free Trade Agreement (ACFTA) on the Greater Mekong Sub-region (GMS), with a specific focus on Cambodia. It examines how tariff reductions have driven trade flows and the resulting pollution intensity, noting that while some countries experience 'pollution gains' by importing dirty goods, this often shifts environmental degradation to the producer, primarily China. The report also highlights the risk of natural resource depletion, particularly deforestation and overfishing in Cambodia, driven by increased demand for wood, rubber, and fish.

• The ASEAN-China Free Trade Agreement (ACFTA) has been a primary driver of trade expansion between China and the GMS5 countries, particularly for goods with reduced tariffs. This is evidenced by the robust growth of imports in product groups with lowered tariffs compared to those with unchanged rates.
• Trade between China and the GMS5 is split between low-pollution and high-pollution sectors. While two-thirds of trade volume is in the least polluting sectors, one-third is in the most polluting sectors (those emitting over 1,500 pounds of toxic pollution per million USD of production), which generate significant pollution levels.
• China is the dominant producer of goods in the most polluting sectors within the GMS trade structure, meaning the majority of the region's trade-related pollution intensity originates in China.
• Cambodia has experienced an environmental 'gain' from trade because it imports high-pollution goods from China while exporting low-pollution goods, effectively shifting the environmental degradation to China.
• Increased trade in natural resource-based products, specifically wood and wood products, poses a severe risk of deforestation in the GMS. This leads to biodiversity loss, land erosion, flooding, and contributes to climate change.
• In Cambodia, the expansion of rubber production to meet Chinese demand threatens heavily forested provinces including Kompong Cham, Kratie, Mondolkiri, and Ratanakiri, potentially increasing deforestation.
• The growth of the fish trade with China may lead to overfishing and the use of illegal fishing methods in Cambodia, threatening fish stocks and the livelihoods of approximately 40% of the population who depend on fishing.
• Cambodian exporters face difficulties utilizing ACFTA preferential tariffs for agricultural goods because they lack the laboratory facilities and technical staff required to obtain Sanitary and Phytosanitary Standards (SPS) certificates.
• The ACFTA lacks specific provisions for environmental cooperation, and while GMS leaders have discussed environmental challenges at summits, there are no institutional mechanisms to coordinate the implementation of protection policies.
• Cambodia's National Environmental Action Plan (NEAP) is hindered by budget shortages, a lack of skilled staff, overlapping agency functions, and poor physical facilities.

APA

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

Chicago

International Institute for Sustainable Development. Environmental Impacts of the ASEAN-China Free Trade Agreement on the Greater Mekong Sub-Region. n.d. https://www.iisd.org/system/files/publications/tkn_enviro_impacts_china.pdf.

Wikipedia

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

BibTeX

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