The WTO castigates the many barriers to trade in environmental goods

Posted Nov 8, 2022, 7:15 a.m.

Global trade is as much akin to Doctor Jekyll as it is to Mister Hyde. On the dark side, international trade in goods and services alone accounts for around a third of greenhouse gas emissions. On the bright side, global trade can contribute to the decarbonization of economies by promoting the dissemination of green technologies through increased trade.

This was defended on Monday by the Director General of the World Trade Organization (WTO), Nogozi Okonjo-Iweala during a press briefing at COP27, in Sharm el-Sheikh, Egypt, presenting the results of the report. 2022 annual report on world trade. “While trade itself generates emissions (Editor’s note: greenhouse gases) related to production and transport, trade and trade policies can accelerate the diffusion of advanced technologies and best practices, strengthen incentives to innovation while creating the jobs of tomorrow,” she noted.

For example, if the cost of solar electricity has fallen by 97% since 1990, it is indeed due to international trade and the creation of international value chains. Nevertheless, there are still many obstacles to the dissemination of these green technologies, she regretted, presenting the results of the 2022 annual report on world trade.

Environmentally friendly trade agreements

First observation, too few regional trade agreements explicitly contain provisions relating to the fight against climate change. Only 64 out of 349 agreements have it. And only some commit the countries that have signed a regional agreement to implement the Paris Agreement signed at Le Bourget in 2015 at COP21.

Second finding, barriers to trade in environmental goods and services remain significant. Although customs duties on environmental goods are, on average, lower than those on other goods, they remain relatively high in low-income countries. Importantly, customs taxes and technical regulations governing trade tend to be lower in carbon-intensive industries than in clean industries. Clearly, in the current state of things, fossil fuels are still too privileged.

A reduction in emissions at stake

For the WTO, the elimination of customs duties and the reduction of restrictive technical measures on certain environmental goods linked to energy (photovoltaic panels, turbines for wind turbines, etc.) could increase world exports of these products by 5% (109 billion dollars) by 2030. This would result in better energy efficiency and a 0.6% drop in global CO2 emissions in 2030 assures the Organization. The diffusion of environmental innovation on a larger scale would do even more: it would increase the demand for ancillary services related to the sale, delivery, installation and maintenance of environmental technologies. This will translate into millions of additional jobs.

The WTO claims a positive key role in the fight against global warming and the preservation of the environment. The organization cites in particular the agreement reached in a snatch this summer in Geneva prohibiting certain fishing subsidies to preserve biodiversity and the halieutic resource. Significant progress remains to be made. It is still necessary that the member countries, in the current tense geopolitical context, be able to agree on the means and the policies to be followed. For now, Dr. Jekyll has the advantage.

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