Event Explores How Multilateral Trade Can Address Environmental Challenges
By IISD's SDG Knowledge Hub, June 16, 2022
By Kensington Speer, Intern, CUTS International Geneva
A roundtable, convened by the International Institute for Sustainable Development (IISD) and partners, discussed the role of trade and the multilateral trading system (MTS) in climate change mitigation and adaptation. The session took place during IISD’s Trade and Sustainability Hub held in parallel to the World Trade Organization’s (WTO) Twelfth Ministerial Conference (MC12).
The event consisted of two parts. Alice Tipping, Lead, Sustainable Trade, IISD, moderated the first part of the session. Speakers presented the progress on addressing climate change in the MTS achieved by various WTO initiatives.
Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development, Canada, discussed the work of the Trade and Environmental Sustainability Structured Discussions (TESSD), including its informal working groups on environmental goods and services (EGS), trade-related climate measures, the circular economy, and environmentally harmful subsidies. She highlighted the initiative’s goal to create international trade policies to facilitate the “transition to climate-neutral resource efficiency and circular economy, while also reaching for the SDGs.” Ng noted that TESSD will engage in a high-level stocktake at the end of 2022.
Wendy Matthews, Ministry of Foreign Affairs and Trade, New Zealand, spoke about fossil fuel subsidy reform (FFSR) at the WTO. She explained how fossil fuel subsidies distort trade and investment decisions and make it more difficult for renewable energy to compete on the energy market. Recent progress towards such reform, she said, includes increased membership and co-sponsorship of FFSR at the WTO, the acknowledgment of the need for FFSR at the Glasgow Climate Change Conference, and the movement away from fossil fuel use by many Asia-Pacific countries. Matthews hoped that more concrete FFSR policies will be created before MC13.
Daniel Legarda, Vice-Minister of International Trade, Ecuador, discussed the WTO’s Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade (IDP). Legarda urged the WTO to address plastic pollution, highlighting the UN Environment Assembly’s (UNEA) recent resolution that initiated the process towards an international legally binding instrument on plastics. He noted that the IDP working groups will meet in July 2022 to engage in more structured discussions on plastic pollutants.
Aik Hoe Lim, Director of Trade and Environment Division, WTO, highlighted that the WTO’s founding agreement “enshrines” the connection between trade and the environment. He said the WTO’s Committee on Trade and the Environment (CTE) acts as an “incubator for new directions on circular economy, plastic pollution, and climate change,” including the initial proposal for the ongoing MC12 fisheries subsidies negotiations.
Ieva Baršauskaitė, Senior Policy Advisor, IISD, moderated the second part of the session. Panelists discussed how multilateral trade initiatives are protecting biodiversity, helping curb overfishing, enabling adaptation to climate change, facilitating the decarbonization of industries and economies, and supporting the reduction of plastic pollution.
Beatriz Fernandez, Associate Programme Management Officer, Environment and Trade, UN Environment Programme (UNEP), explained how trade can play a role in protecting the world’s biodiversity. She listed removing subsidies, preventing biodiversity-harming trade, and addressing deforestation as ways the WTO can help preserve biodiversity through trade measures.
Isabel Jarrett, Manager, The Pew Charitable Trusts, said the MC12 fisheries negotiations have an “historic opportunity to show that multilateral trade can deliver environmentally sustainable outcomes.” She emphasized the need for a binding agreement that could serve as a “blueprint for future agreements and WTO reform,” and advocated for creative thinking and negotiating strategies on this issue.
Prerna Prabhakar, Programme Associate, Council on Energy, Environment and Water (CEEW), outlined three characteristics of the trade-environment nexus:
- The scale effect: exports lead to an increase in emissions;
- The composition effect: trade of environmental goods and services (EGS) benefits the environment; and
- The technique effect: trade partners exchange environmentally friendly technologies.
Prabhakar advocated for harmonization of EGS product classification, reduced EGS tariffs, exchange of capacity-building technologies, and investment in environmentally skilled labor force.
Jan Yves Remy, Director, Shridath Ramphal Centre, University of the West Indies, highlighted that small island developing States (SIDS) – some of the countries most affected by climate change – deserve a central voice in the creation of environmental trade policy. Remy listed five ways this goal can be achieved: 1) identifying linkages between trade and the environment in SIDS; 2) harmonizing international organizations’ climate change agendas; 3) coordinating across WTO work programmes; 4) maintaining climate change as a separate topic of interest at the WTO; and 5) the WTO recognizing SIDS as a “distinct negotiating group.”
Pierre Leturcq, Senior Policy Analyst, Institute for European Environmental Policy (IEEP), highlighted border carbon adjustment (BCA) as a legitimate mitigation policy under the Paris Agreement on climate change, and advocated for its adoption at a multilateral level. He acknowledged that the EU’s BCAs are currently “suboptimal,” with the potential to be “chaotic and uncoordinated,” lead to exclusionary bilateral agreements, and carry unnecessary adaptation costs for developing countries.
Carolyn Deere Birkbeck, Director, Forum on Trade, Environment and the SDGs (TESS), discussed how WTO trade measures can prevent plastic pollution. She said trade in plastic waste often flows into countries with inadequate waste management, and indicated that WTO members have made progress on this issue through IDP, which works to create “concrete, pragmatic outcomes” on reducing plastic pollution. She further underscored that circular economy policies, import restrictions and bans on harmful plastics, international policy harmonization, and bolstering the Basel Convention Plastic Waste Amendments can prevent plastic pollution.
IISD organized the 14 June 2022 roundtable in partnership with TESS, UNEP, The Pew Charitable Trusts, the Shridath Ramphal Centre at the University of the West Indies, IEEP, and CEEW.
MC12 convened in Geneva, Switzerland, from 12-15 June 2022. [IISD Trade and Sustainability Hub] [IISD Knowledge Hub Sources]