THE ENVIRONMENTAL IMPACT OF PREFERENTIAL TRADE AGREEMENTS: INPUT-OUTPUT ANALYSIS: CASE OF INDONESIA

Abstract

 Trade has been agreed as one of the economic growth factors because of its impact to several economic sectors, such as investment and information technology development; however, it also has an effect on the environment. The more goods traded the more economic activity and the bigger the impact on the environment. The preferential trade agreements have been encouraged to increase the volume of trade between the parties involved. Currently, Indonesia is involved in several free trade agreements, and it which results in a growing volume of imported goods to be used in the economic activities as reflected in the Input-Output Table. This paper attempts to analyze the impact of the implementation of preferential trade agreement schemes in Indonesia by using the Environmentally Extended Input-Output Analysis method developed by Wassily Leontif. The final calculation shows the significance of carbon emissions released from agriculture sectors.