WTO's trade policy toolkit for climate action

The World Trade Organization (WTO) has unveiled its 10-point set of trade policy tools for climate action at the 28th United Nations Climate Change Conference (COP28) in Dubai. Here are the main points.

Governments could revise their domestic procurement policies to include and mandate climate-sensitive criteria, such as science-based, low-carbon requirements in tenders. Implementing trade facilitation measures, such as digitalisation of paper-based trade processes can help reduce border control delays and consequently, the related wasteful energy consumption. Import tariffs could be reviewed to promote  the affordability and uptake  of products such as renewable energy equipment and electric vehicles (EVs) needed for the transition to a low-carbon economy.

The growing number of energy efficiency requirements for consumer goods such as EVs or household appliances has already helped reduce domestic energy consumption and related annual greenhouse gas emissions but different methodologies across the world for calculating the energy efficiency of goods can increase compliance costs for producers and exporters. Reduction of restrictions to trade in key services related to climate mitigation and adaptation can support governments’ climate action strategies. To better respond to extreme weather events, economies could, for example, facilitate the recognition of professional qualifications of foreign service providers of relief services and reconstruction in a manner compatible with WTO rules. Temporary movement of certain categories of technical experts, such as climate mitigation and adaptation specialists, to supply services abroad could be facilitated.

Reforming and repurposing subsidies and improving the understanding of the environmental impacts of existing subsidies could help to identify the priorities for reform. The trade finance gap between demand and supply for climate-related goods should be closed to increase the trade in products and technologies needed for the transition to a low-carbon economy. More open, fair and well-functioning global markets for food and agricultural products can play a critical role in shaping and assisting climate action, strengthening global food security, and reducing price volatility for food and fertilisers.

To protect people, plants and animals from new pest and disease risks linked to climate change, the governments can adopt strategies and policies that strengthen sanitary and phyto-sanitary (SPS) measures to safeguard human/plant/animal health. It must be ensured that producers in vulnerable economies suffering from the impacts of climate change are equipped to meet these new SPS standards, so that they do not end up shut out of key export markets. Coordination of internal taxes, including carbon pricing, can be achieved through various international platforms. Cooperation can also pre-empt trade tensions and accusations of protectionism in relation to carbon pricing policies. All views and concerns should be taken into account in discussions on carbon pricing and other approaches to reducing emissions.

All these recommendations are from the researchers at the WTO Secretariat. The governments of the member countries of the WTO may or may not agree.  Dr Ngozi Okonjo-Iweala, the director-general of WTO, says that the toolkit focuses on issues at the heart of delivering a people-centric green transition, bringing down the cost of clean energy, decarbonising supply chains, aligning standards and regulations, repurposing subsidies, and creating new business opportunities in the emerging low-carbon economy. 

Our policymakers may take note of the recommendations and fine-tune our policies. Our approach to discussions on trade and environment issues at the multilateral forums can also be taken up for review. 

Email : tncrajagopalan@gmail.com