climate change

The Devilishly Hard Job of Defining an Environmental Good

The Devilishly Hard Job of Defining an Environmental Good

What explains this apparent paradox of accelerating focus on taking steps to tackle climate change with limited forward progress in crafting trade policies that are responsive to climate-friendly objectives?  The Asian Trade Centre’s newest Policy Brief looks in detail at the difficulties of defining environmental goods.  [This Talking Trade post merely highlights some of the issues explored in the Brief—be sure to read the whole thing!] Policymakers in search of answers zeroed in on challenges in moving environmentally-friendly products across borders.  They were able to identify one specific issue: potentially high levels of tariffs applied to certain goods at the borders.  These tariffs were acting as a brake, impeding the flow of goods and driving up costs. Hence, one early and sensible idea was to consider how to reduce tariffs on environmentally friendly goods.  If tariffs are leading to lower utilization of climate-friendly products, the reduction or elimination of tariffs on these products should lead to their greater use. APEC members intended to have signatories agree to reduce tariffs on listed products to less than five percent within three years.  There would be “real world” consequences to inclusion/exclusion from APEC’s list of environmental goods (EGs).  Items on the list would have tariffs reduced or eliminated while those not included would not. Getting to the final set of 54 EG products, released in 2012, was not an easy process.  Understanding why it was so hard highlights the difficulties that are likely to affect a range of policy responses ahead.

Navigating the Climate-Trade Nexus in Asia: A Path to Sustainability

Navigating the Climate-Trade Nexus in Asia: A Path to Sustainability

Asia is home to over half of the world's population and boasts diverse landscapes, from bustling urban centers to extensive agricultural regions. However, this diversity also makes Asia particularly vulnerable to the impacts of climate change, such as rising sea levels, extreme weather events, and devastating floods. These climate challenges intersect with trade policies, especially as the world shifts towards carbon reduction and green technologies. Yet, discussions among trade policymakers about the impact of environmental policies on trade practices have been limited. This limited dialogue is partly due to the global focus on building consensus to combat climate change, as seen in the United Nations Framework Convention on Climate Change (UNFCCC). With the 28th Conference of the Parties (COP 28) scheduled for late 2023 in Dubai, the importance of considering the trade-related implications of climate measures is growing. Environmental provisions have been included in various trade commitments for some time, but the urgency of the climate crisis is pushing trade policy into the forefront. The interconnectedness of environmental issues across borders has long been recognized, from concerns about acid rain to ozone depletion. However, global climate change challenges are on a different scale, leading to international treaties like the Kyoto Protocol and the Paris Agreement. These treaties obligate governments to take action to reduce greenhouse gas emissions. As these commitments are put into practice, it becomes increasingly important to consider how climate-related policies will impact trade flows and practices. While there are some multilateral efforts within the World Trade Organization (WTO) to address trade and environmental concerns, there are currently no specific global trade agreements focused on sustainability. The complexity of trade, sustainability, and climate issues has led to alternative approaches, including regional forums like APEC and ASEAN, as well as bilateral initiatives, to address these emerging challenges.

Three Questions for Policymakers on the Future of Trade

Three Questions for Policymakers on the Future of Trade

Dematerialization should be a high priority in addressing climate change, which is an existential threat that even outweighs COVID-19. Headline numbers from the UN IPBES report cite the potential extinction of over 1 million species. The report demands fundamental transformative change across “technological, economic, and social factors, including goals, paradigms, and values.” In this context, “global commons” issues require upgraded transnational frameworks for promoting development of less material-intensive production and consumption. Where, how, and by whom can these demands be met? Our go-to institution for the past decades, the World Trade Organization (WTO), is ill suited to these forthcoming tasks. Suffering from geopolitical pressures and energy-sapping incremental deals, WTO members have shown an unfortunate inability to adapt to the changing nature of trade. In the context of the climate challenges noted above, one of the WTO’s bedrock principles of “like products” will become increasingly untenable as a basis for tariffs. The erosion of the WTO’s dispute settlement function and its apparent inability to blunt protectionist actions on goods augurs against hope for leadership from its members. The WTO’s General Agreement on Trade in Services (GATS) was originally designed as a highly flexible instrument but it has remained static in terms of freeing services flows: a flexible instrument in the hands of inflexible negotiators. The WTO TRIPs agreement on intellectual property rights, advanced a framework for cooperation, has ultimately has proven to be divisive.