ENVIRONMENT

WEF Council Proposes Five Actions to Harness Trade to Tackle Environmental Challenges

  • The paper identifies five ways in which trade rules can support environmental action: facilitating trade in environmental goods and services and building circular economies; reporting, reducing, and eliminating fossil-fuel subsidies; encouraging a dialogue on climate policies; advancing green government procurement; and improving collaboration to ensure that trade and trade policies align with environmental sustainability goals.

  • The brief cautions that action on trade and the environment will “only be credible if governments reach a deal to end harmful fisheries subsidies” by the end of 2020, as called for in SDG target 14.6.

The World Economic Forum’s (WEF) Global Future Council on International Trade and Investment released a briefing paper that examines the role of trade policy in intensifying action to address biodiversity loss, climate change, and pollution. The paper argues that it is “an imperative to make international trade a central part of the solution” to environmental challenges and to align trade and investment with the SDGs.

The paper titled, ‘How Can Trade Rules Support Environmental Action?’ identifies five ways in which trade rules can support environmental action and a greener global economy. These proposals aim to respond to an increased interest among public- and private-sector leaders on how trade policy can help tackle global challenges. First, the paper calls for facilitating trade in environmental goods and services and building circular economies. Potential actions include: eliminating tariffs on environmentally friendly goods, including those related to energy efficiency and renewable energy, plastic waste disposal and materials recycling, and air pollution; removing barriers to the establishment of subsidies for the supply of environmental services; making use of international standards for regulations affecting environmental goods and services and encouraging stakeholders to “plug gaps” in international standards, such as on waste quality; promoting transparent and non-discriminatory eco-labeling initiatives; and removing barriers to trade in remanufactured goods to extend product life.

Second, the paper proposes reporting, reducing, and eliminating fossil-fuel subsidies, arguing that even a partial scale-back could result in significant emissions savings and incentivize plastic recycling. The paper recommends that governments consider joining World Trade Organization (WTO) discussions on reforming fossil-fuel subsidies, and suggests that a WTO initiative could help to increase transparency and reporting and facilitate an evaluation of the trade and resource impacts from fossil-fuel subsidies.

The impetus for action will only be credible if governments reach a deal to end harmful fisheries subsidies by the end of 2020.

Third, the paper recommends a dialogue on climate policies, including between trade and climate change policymakers to ensure alignment between trade rules and climate change goals. Additional potential actions include designing carbon pricing regimes and border carbon adjustments in ways that are consistent with international trade rules and fair to trading partners, and avoiding excessive administrative burdens, especially for small and medium-sized enterprises (SMEs).

Fourth, the paper proposes advancing green government procurement to spur the development of clean technologies and the use of green products. The paper states that green procurement policies can help eliminate the use of single-use plastics and reduce plastic pollution, and highlights the WTO Government Procurement Agreement, under which 48 signatories have agreed to a work programme on sustainable procurement, including identifying policies that encourage efficient, sustainable procurement that is consistent with trade obligations.

Finally, the paper observes that climate and trade agreements insufficiently reference each other, and calls for improving collaboration to ensure that trade and trade policies align with environmental sustainability goals. Potential actions to improve collaboration include: increasing cooperation between trade, environment, and climate change policy spheres and addressing inconsistencies across these areas; and establishing a formal mechanism for input and action from non-state stakeholders on global trade and environment discussions, similar to what was done under the Lima-Paris Action Agenda, established at the Lima Climate Change Conference in 2014.

The brief cautions that action on trade and the environment will “only be credible if governments reach a deal to end harmful fisheries subsidies” by the end of 2020, as called for in SDG target 14.6. The paper states that although one-third of the world’s fish stocks are overexploited, an estimated USD 22 billion in public spending supports overfishing annually.

The paper concludes that it is “incumbent on trade policy-makers to show they can take action on important environmental goals.”

Published in March 2020, the briefing paper does not take into consideration impacts of the COVID-19 pandemic. As covered by the SDG Knowledge Hub here, WTO negotiations on eliminating harmful fisheries subsidies have slowed as a result of the COVID-19 pandemic, but discussions are set to ramp up in September 2020.

The WEF Global Future Councils aim to foster interdisciplinary and long-range approaches by providing thought leadership and promoting innovative thinking on key global challenges. The Global Future Council on International Trade and Investment aims to steer reflection on policy responses under several potential future technology and globalization scenarios.

 

[Publication: How Can Trade Rules Support Environmental Action?] [Publication Landing Page] [Global Future Council on International Trade and Investment Webpage]

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