Racing to the Bottom? Trade, Environmental Governance, and ISO 14001

Globalization critics argue that international trade spurs a race to the bottom among national environmental standards. ISO 14001 is the most widely adopted voluntary environmental regulation which encourages firms to take environmental action beyond what domestic government regulations require. Drawing on a panel study of 108 countries over seven years, we investigate conditions under which trade linkages can encourage ISO 14001 adoption, thereby countering environmental races to the bottom. We find that trade linkages encourage ISO 14001 adoption if countries ’ major export markets have adopted this voluntary regulation. Whether international trade hurts or harms theenvironment is an important question in aca-demic and policy circles. In this article, we employ a panel of 108 countries over seven years to in-vestigate whether international trade encourages firms to adopt ISO 14001, the most widely adopted non-governmental environmental regime. In doing so, we provide an empirical test for Vogel’s (1995) “California effect ” where trade serves as a vehicle for transmit-ting importing countries ’ regulatory standards to ex-porting countries. Vogel’s (1995) argument applies t