It is widely suspected that international trade may harm the environment because of the incentives to locate the most polluting activities in so-called “pollution havens”, i.e. countries with lax environmental standards. However, the large literature on this subject is still unsettled. Moreover, one important empirical aspect of international trade, namely transport activities, while often put forward in the public debate, has not obtained adequate attention in academic circles so far. This research project, divided into three parts, attempts to bring back transport activities into the trade and environment literature. • First a new theoretical model is built, which includes international transport activities that have different emission intensities according to the mode of transport. • Second, this extended framework is applied to show the extent to which factoring in polluting transport activities affects the empirical relationship between trade and the environment. This leads to first order estimates (i.e. estimates that abstract from general equilibrium interactions) of the effects of trade on world pollution emissions. This will require the collection of emission intensities in different transport modes and making several assumptions about industrial emission intensities across countries and across time. • Third, general equilibrium effects are introduced first at the country level, then at the world level via the linking of single country models. This will be done on the basis of a family of stylized computable general equilibrium (CGE) models. We propose to simulate the effects of globalization leading to an increase in the volume of trade and changes in environmental regulations taking into account the different interactions in a stylized North-South world. Apart from a reasonable characterization of the transport sector, the simulation framework should allow us to capture price effects, intersectoral linkages and resource constraints, all of which were purposefully set aside in the earlier part of the project. The resulting simulations are intended to provide orders of magnitude of the impact of trade on the environment when the pollution generated by trade itself is taken into account and where the choice of transport mode will depend inter alia on eventual taxes on different modes of transport.