APEC

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.

Bright Spots for Trade in Asia

Bright Spots for Trade in Asia

Two other important groupings have important milestones in August. The members of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) are meeting on August 5. The CPTPP, which still has no Secretariat to manage this sprawling and complex trade agreement, is instead driven by a series of meetings across the year by government officials working on various aspects of the deal. The primary mechanism for oversight is the CPTPP Commission, which will be held virtually under Mexico’s chairmanship this year. The Commission meeting should be notable for a few reasons. First, it is an opportunity to celebrate the achievements of the agreement after more than 18 months in operation. While trade flows remain depressed under the pandemic, governments like Vietnam have taken advantage of the opportunity to expand knowledge. Vietnam held 577 seminars and workshops in 2019 alone to encourage the proper utilization of the CPTPP by firms of all sizes across the country. Second, the Commission will review any issues that have emerged in implementation. An agreement that runs to nearly 600 pages with thousands of country-specific commitments is bound to have a few issues. As a simple example, a typo in one of the letters mentioned yams instead of yarn.

RCEP: Reaching Substantial Conclusion?

RCEP: Reaching Substantial Conclusion?

Missing from all this cooperation, however, has been a mechanism to integrate the whole of Asia together in a meaningful way.  RCEP provides this template.  “Substantial conclusion” will not mean that people will be eagerly reviewing the texts and schedules on November 5.  There are two reasons for a delay in seeing the contents.  First, officials have been frantically switching, dropping and including provisions over the past few weeks in the sprint to the finish line.  Most of these elements have been under discussion for years.  RCEP officials started working on the deal at the end of 2012.  However, in the final push to get an agreement done, sensitive items actually have to get addressed and dealt with one way or another.  To ensure consistency across the document, the lawyers will need to carefully review the entire deal from start to finish.  The need for a careful legal scrub is not unique to RCEP.  Most trade agreements require something similar and ought to be welcomed by all.  The worst outcome would be to have a deal riddled with flaws that need correction later.

Global Trade System in Crisis: A Failure to Think of Treatment Options

Global Trade System in Crisis: A Failure to Think of Treatment Options

But slow stagnation does not automatically mean crisis.  The current state of calamity in trade comes from the new approaches taken by the largest players in the system. This is not a post to discuss the diagnosis of the problem.  It is, instead, to discuss the difficulties in treating the patient.  What has been especially striking over the past few weeks has been the inability of many trade policy experts to conceptualize treatment options that go beyond simple remedies.  If, indeed, the patient is on life-support or headed for the ICU, it may be necessary to think of unusual options. Yet different forums that ought to be perfectly positioned to do so seem to be caught.  Perhaps they do not want to acknowledge the severity of the illness, do not want to admit that the diagnosis goes beyond conventional treatments, do not want to handle the intervention of others in handling the patient treatment, or do not want to think about more depressing trade news.

Minister Lim: The Importance of Globalisation and Inclusive Growth

Indeed, globalisation is not a panacea for all economic woes nor does it come without costs. While globalisation has lifted hundreds of millions of people out of poverty, and brought immense benefits to consumers, we have to acknowledge the growing discontent. Benefits from globalisation have not been distributed evenly. We also have to recognize the impact of disruptive technologies, which can result in skills becoming obsolete and being displaced.  However, we should not make globalization the scapegoat for slowing growth and unemployment. Closing borders and turning inward is not the answer. Economies are so interdependent nowadays that it would be very difficult to disconnect from the global value-chain. If we do so, our businesses and communities will lose out. Markets will shrink, fewer jobs will be created and consumers will have to bear higher costs and will have fewer choices. We should avoid actions which will only hurt ourselves and lead to retaliatory measures, undoing the good progress that we have achieved so far.