17 Apr WTO & Climate Change
Trade and Climate Change
The World Trade Organisation’s biennial Ministerial Conference took place in Abu Dhabi, in March 2024. These conferences are not known for reaching agreement on difficult issues such as climate change. However, Ngosi Okonjo IWeala, the Director-General , was determined to confront the view that free trade is part of the climate problem because it generates transport emissions and can help drive carbon-intensive economic growth. Instead, she argues the body can be part of the solution: by tackling fossil fuel subsidies, harmonising carbon price policies to prevent emissions merely being displaced to other countries or tackling import tariffs for low-carbon goods like electric cars, which tend to be higher than for combustion ones.
A commitment to sustainable trade is in the WTO’s 30-year- old founding document, with members aspiring to “protect and preserve the environment and to enhance the means for doing so”. But the founding document also has enshrined in it the principle that all other policy measures must not unnecessarily restrict or create obstacles to international trade. Moreover, and in stark contrast with climate agreements, all trade and investment agreements are both fully binding and enforceable.
Some countries, like India, say the issue has no place on an WTO agenda it wants confined to pure trade matters. Many developing states fear that countries’ new policies in this area, such as the EU’s carbon border tax, will place them at a trade disadvantage since they have fewer resources to decarbonise their industries. Some wealthy states prefer to go it alone with their own policies, believing they have enough flexibilities under the rules as they are, and that a big multilateral negotiation on new rules would not be helpful, and could even constrain some of their future environmental measures.
These different perspectives are deep seated and will not be drawn together easily. The agreement of the Ministerial contains a single paragraph at the end on the topic of the challenges of climate change: “Co-sponsors of three environmental initiatives at the WTO presented at the Conference the next steps they are taking to advance work on plastics pollution, environmental sustainability, and fossil fuel subsidy reform. “ For those like Okonjo IWeala who see the WTO as a possible forum to help the world cope with the threat of climate change the hopeful sign is that groups of countries keen to make progress on environmental topics are discussing these ideas. These talks known as “plurilaterals” may form the basis for broader negotiations on new rules binding for all countries.