Setting Standards for Environmental Goods

Trade in environmental goods plays a central role in addressing global environmental challenges. It facilitates the advancement, adoption, and dissemination of environmental technologies to mitigate environmental risks, reduce pollution, and optimize resource utilization. In ATC’s previous Policy Brief (23-02), we discussed two main categories of environmental goods: 1) products that are supportive of environmental protection or yield positive environmental outcomes and 2) products that are comparatively more “environmentally friendly” than similar products serving the same purpose.

The latter category presents particular challenges for the trading system, as identifying environmentally friendly goods necessitates clear criteria and standards, which can be complex to define. Moreover, establishing interoperable standards and labelling criteria for environmental goods requires a delicate balance between setting ambitious environmental objectives and ensuring feasibility and cost-effectiveness for manufacturers. The absence of universally accepted standards and labels for environmental goods leads to variability across countries and regions, which can hinder trade and create disparities in the assessment of product environmental performance. Despite the challenges, institutional and country-level initiatives have gained momentum in developing internationally recognized standards, particularly in areas such as carbon footprint measurement, energy efficiency, water efficiency, and greenhouse gas emissions. Quantification of such production emissions and performance outputs provide increased knowledge base and data to promote international cooperation in the exchange of environmental and trade policy-relevant technical and scientific information, and support work to harmonize product standards and labels relevant to achieving environmental objectives. Our newest Policy Brief, released today, discusses two types of environmental standards and labels – mandatory or voluntary. Mandatory standards and labels are imposed by government regulations and can be considered non-tariff measures (NTMs). Voluntary standards, on the other hand, are typically developed by non-governmental entities or corporations and are not regulated by laws. Both approaches have their advantages and disadvantages, and their selection depends on industry-specific objectives and regulatory environments.

Wanted: An Unusual Suspect for the Next WTO Director General

It is time for WTO members to salvage the system they have and begin its repair rather than choosing a new wallpaper. This is a tall order for the next Director General. The next DG must have an intimate understanding of emerging trade and economic issues, particularly those that will define competitiveness and sustainability in the future in areas such as digital, services, and intellectual property, which account for a growing proportion of value-added. Issues related to climate change—from carbon reduction solutions to climate friendly products and processes—will play a growing role in national actions and thus in trade policy. Part of the DG’s role will be to demonstrate to members that these are no longer Northern agenda items, but global ones, and that multilateral engagement on these issues is essential to deliver prosperity for all. High on the list of selection criteria should be managerial skills, which have been given lower priority in previous processes. Such skills include the capacity to envision, to bring out-of-the-box thinking to bear, and to guide change processes with members; to synthesise and communicate a shared vision of an updated WTO; and the ability to energise members and the WTO staff in the Secretariat toward a mission of reform. She or he will need the interpersonal skills to bridge differences and build trust, and the strategic and tactical skills to organise for action. The WTO possesses a devoted and high-calibre Secretariat with whom the DG should promote shared objectives and leadership in generating the innovation that will be needed for effective change