• Environmental and Resource Economics Review
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• v.13 no.4
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• pp.621-655
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• 2004

Emission Trading (ET) among Annex I countries as expounded in Kyoto mechanism can be an effective mean to control Greenhouse Gases(GHGs), particularly $CO_2$ emissions from fossil fuels. For the international ET to be an effective tool to reduce the global emissions, however, it presupposes that there are no carbon leakage, i.e. Annex I emitters will purchase emission permits if emitting above caps, rather than importing emission-intensive goods from non-Annex I countries thus inducing the foreigners to emit instead. The extent to which a country leaks carbon through trade can be revealed by its bilateral balance of current accounts and related Balance of Emissions Embodied in Trade (BEET) supplemented by Emission Terms of Trade (ETT). Earlier studies on BEET and ETT relied on few selected countries in a partial equilibrium context, Korea being treated as insignificant though she is not a minor emitter. This paper is an attempt to examine BEET in the global CGE framework and to compare its structural difference across countries, with a special emphasis on South Korea.