The trade effects of government-backed voluntary certifications: The case of Bonsucro-RED certification in Brazil
Rodrigo Fagundes Cezar (FGV)
Eduardo Mello (FGV)
Juliana Camargo (FGV)
Do sustainability certifications harm the exports of developing economies? As voluntary schemes become an instrument for governments to assure compliance with environmental requirements in trade agreements, the impact of such public-private partnership of sorts on the exports of developing countries is ever more relevant to explore. Still, empirical evidence shining light on that issue is scant. This paper fills this gap in the literature by assessing the impact of private certifications in compliance with EU public regulations on selected exports from Brazil to the EU. We employ an instrumented difference-in-differences estimator to assess whether Brazilian municipalities with producers abiding to Bonsucro’s EU’s Renewable Energy Directive (RED) certificate experienced an increase/decrease in their exports of sugar and ethanol to EU-26 countries. A decrease in the volume of exports could suggest that RED serves as a non-tariff measure on Brazil’s exports. The findings will have key implications to thinking about the politics of trade and sustainability and about the legitimacy of private certifications as an extension of the government in its monitoring functions.
