Swedish event explores the possibilities of a trade and climate agreement | News | SDG Knowledge Center


The Swedish Foreign Ministry (MFA) hosted an event that explored how the World Trade Organization (WTO) can help tackle climate change and a green recovery from the COVID-19 pandemic through the through multilateral or plurilateral negotiations on important issues for the climate transition. Participants discussed the possibilities of a trade and climate deal, and what it might include.

The session was held as part of the 2021 WTO Public Forum on October 1.

Robert Watt, Stockholm Environment Institute (SEI), moderated the session. He underscored the urgent need and opportunity for international trade institutions to help meet climate change targets.

Krister Nilsson, Secretary of State, Swedish Minister for Foreign Trade and Nordic Affairs, highlighted the upcoming twelfth WTO Ministerial Conference (MC 12) and the Glasgow Climate Change Conference (COP 26), the arenas that provide opportunities to focus on the substance. He referred to the pioneering example of Sweden, which reduced its greenhouse gas (GHG) emissions by 24% between 1990 and 2019 while tripling its gross domestic product (GDP) and reformed its credit system to export in accordance with climate objectives.

Emilie Eriksson, Swedish National Board of Trade, relayed the findings of her upcoming report on how the trade regime could help achieve the goals of the Paris Agreement. She said the report focuses on liberalizing trade in environmental goods and relevant services – by reducing tariffs and non-tariff barriers and through market access concessions – and reducing fossil fuel subsidies. Regarding environmental goods and services, the document explores what goods and services could be included in an agreement and proposes several new categories. It also discusses how to address non-tariff barriers, for example through mutual recognition of conformity assessments and international harmonization of product standards. Reflecting on legal avenues for an agreement, Eriksson argued that a plurilateral agreement would be preferable, but perhaps difficult to achieve because it requires consensus, and therefore alternatives, such as a benchmark paper-like approach, are also explored. She said the document will be available in the next few months here.

In the ensuing discussion, Eriksson noted that the need for a critical mass of parties is low in the case of an agreement on environmental goods and services, since the parties would benefit from commitments between them. In contrast, she said critical mass is crucial in efforts to reform fossil fuel subsidies, to ensure that commitments do not leak emissions to other producers.

Brett Longley, Ministry of Foreign Affairs and Trade, New Zealand, provided an overview of work on the Agreement on Climate Change, Trade and Sustainability (ACCTS) – a plurilateral negotiating effort currently underway between six WTO members – New Zealand, Costa Rica, Fiji, Iceland, Norway and Switzerland. The rationale for ACCTS, he said, is the belief that trade policy and legislation can contribute to climate solutions, and the recognition that multilateral negotiations are “daunting and lengthy, if they can be carried out. in the long term ”. The negotiations, which after six rounds are at the consolidated text stage, focus on environmental goods, environmentally relevant services, fossil fuel subsidies and voluntary eco-labeling. Longley listed the preliminary lessons, including the need for a wide range of participants, the emphasis on providing in-depth information to negotiators, the value of virtual negotiations and having developing countries lead the discussions on aspects of development. He noted that ACCTS is designed to ultimately be open to all WTO members who want it, and to support multilateral rules and institutions.

Claudia Mvula Pollen, Consumer Unit Trust Society, Zambia, described the challenges facing developing countries to achieve the necessary climate ambition embodied in low carbon development strategies. According to her, the least developed countries (LDCs) are mainly concerned with development and obtaining middle-income country status. To the extent that climate goals overlap with this pursuit, much of it relates to adaptation to climate impacts, rather than mitigation of GHG emissions, which are typically few in number. Nature-based solutions, such as forestry and agriculture, and blue carbon ecosystems that ensure coastal and marine carbon capture are in line with this direction, she noted.

Among the significant challenges, Mvula Pollen noted the lack of access to finance, a crippling digital divide and the external debt that swelled during the COVID-19 crisis. Given their relative lack of fiscal and technical capacity to facilitate a low-carbon transition, she argued, few LDCs are willing to link trade and environmental issues to the WTO, assuming their flows of export will eventually suffer.

In the ensuing discussion, she noted that while reduced tariffs on environmental goods and services could benefit LDCs, the main obstacles to deployment and dissemination are at the national level. On this issue, Longley pointed out that many LDCs disproportionately depend on tariffs as a source of government revenue. [SDG Knowledge Hub Sources] [WTO Public Forum 2021]


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