This book sets out to examine one of the most important issues on trade and the environment, namely, the trade effects of domestic environmental policy. The central question addressed is whether stringent domestic environmental policies reduce the international competitiveness of environmentally sensitive industries. This study is distinguished by two major innovations that go beyond the established literature: the examination of time-series evidence to explore the relationship between environmental regulations and trade patterns, and the introductions of technology factors, together with endowment factors, to explain the empirical evidence.