Key role for WTO to meet emission targets

At the Glasgow Climate Change Summit, the leaders of various countries are announcing their zero-emission targets and the delegates are discussing ways to meet those targets without seriously disrupting the global economy. In moving towards those environmental goals, the role of international trade in goods, services and technologies and that of the World Trade Organisation (WTO) are very important.

International trade facilitates easier access to energy saving devices and other goods and services that help emission reduction and improve management of environment.  So, reducing tariffs and non-tariff barriers for trade in environmental goods is essential to accelerate the transition towards decarbonization and zero-emission targets. Average tariffs on many goods needed for renewable energy are still between 10 per cent and 14 per cent.
 

Stringent environmental standards of importing countries can incentivize adoption of cleaner production processes and technologies, the benefits of which can flow back to the exporting countries. However, some developed countries are moving at a faster pace than others towards cutting emission of carbon dioxide and other greenhouse gases. Their industries are subjected to tough emission standards and so have to incur more costs for producing many items. To help the local producers compete with cheaper imports from countries that do not subject their producers to similar stringent environmental regulations, these countries have decided to take border carbon adjustment measures (i.e. impose carbon tax) on imported goods such as steel, cement, aluminum and fertilizers. Such moves can lead to discriminatory treatment of goods originating from various countries as the environmental regulations and compliances vary from country to country. Many countries exporting goods to Europe and North America see these measures as protectionist.  Agreements on uniform trading rules and WTO dispute resolution mechanisms can help resolve such contentious issues.  

The World Trade Organisation (WTO) is the forum for negotiating multilateral trade deals aimed at developing global rules for trading, advancing trade liberalization and reducing trade distorting measures such as subsidies, technical barriers to trade etc. So, many of the issues relating to trade and environment have to be examined and discussed at the WTO with a view to evolve uniformity in regulations. However, some countries oppose the very idea of regulating trade on the basis of the processes adopted for producing the goods.

Even so, a number of environment-related efforts have been taken at the WTO such as negotiating tariff reductions in environmental goods, evolving more clarity on the relationship between existing WTO rules and specific trade obligations in multilateral environmental agreements and seeking disciplines on fisheries subsidies. Environmental provisions in bilateral and regional trade agreements have also helped harmonize environmental regulations between developed and developing countries. Several countries are exploring possibilities of negotiating environment related plurilateral agreements at the WTO. Since 2009, over 100 WTO members have formally notified more than 4,500 climate related trade measures, from direct taxes to regulations, support programmes and public tender requirements, enhancing transparency. 

The WTO is quite experienced in taking on board the concerns of the developing and least developed countries that are most vulnerable against the effects of climate change and working with other international organisations on environment related trade issues. The 12th Ministerial Conference of WTO is scheduled to start at Geneva from the end of this month. Hopefully, the trade ministers will strengthen the WTO and mainstream the environment issues that affect trade.  

email : tncrajagopalan@gmail.com