How trade can fight climate change

On Monday, ITC and the Least Developed Country (LDC) Group hosted a dialogue on trade and climate change at the World Trade Organization (WTO) in Geneva. The aim of the event was to raise awareness about the role that trade can play to support countries to meet their commitments to the Paris Agreement, ie. how to reduce greenhouse gas emissions and support adaptation actions in developing countries.

Dialogues are limited in what they can achieve. They are after all largely about informing an audience about an issue. However as one of the moderators Ambassador Vangelis Vitalis of New Zealand remarked, this event was significant in that it was taking place in the WTO, an organization whose rules govern international trade. Raising awareness amongst WTO Members about how trade can help address the climate crisis is thus an end in itself.

There were five main messages coming from the High Level Panel made up of Ambassadors, the UN and WTO and the Thematic panel of technical experts. The Panels were moderated by Ambassador Vangelis and I respectively.

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The High Level Panel

1. Least Developed Countries are highly vulnerable to the impacts of climate change – this was vividly portrayed by Moustapha Kamal Gueye from the ILO who described how coastal sea resorts in Senegal were reducing their employment of local people as sea level rises and storm surges were resulting in declining tourist numbers. The resulting social distress is exacerbated by the scarcity of safety nets – in developing countries 70% of workers have no social security. Competitivenss of agriculture will also decline as labour productivity in agriculture is predicted by the ILO to reduce by 7% by 2030 due to climate change. Gilbert Sindjou of Sucafina a coffee trading company described how their coffee production was heavily hit, with coffee planting areas having to increase in altitude. He urged governments to act on the Paris Agreement and invest heavily in research and introduce carbon pricing.

2.Trade has an important role to support mitigation of emissions through disseminating renewable energy technologies. Open trade also helps food insecure countries balance food supplies aggrevated by climate change. However tariff protection is limiting the flow of renewable energy goods to Africa in particular, whilst the service sectors that maintain solar and wind farms can not flourish due to non-tariff barriers on services trade. This is particularly significant when for example a wind turbine is made up of between 3,000 and 6,000 components. Ambassador Vitalis underlined the importance of the WTO in having a “chilling effect” on protectionism and thus safeguarding freer trade in environmental goods and services.

3.Climate regulation will follow the Paris Agreement in the form of carbon pricing, regulation, standards and new investments in research and development. Ingrid Jegou of ICTSD made the point echoed by others on the High Level Panel that we have to “get the prices right” to de-carbonize the economy. Ambassador Cedeno emphasised innvoative approaches to placing a value on nature through payment for ecosystems services in Costa Rica. Gueye from the ILO urged participants to think about a “just transition” i.e. minimizing adverse impacts on low income groups, as economies are restructured through climate regulation.

4.LDCs can “leapfrog” old technologies and de-carbonize their growing economies. Aik Hoe Lim of the WTO asked the room to think the stark contrast in lighting at night in the African continent compared to rich countries. Development necessitates greater access to energy, which can be delivered through climate friendly technologies.Govinda Uphadhyay of a renewable energy start-up LEDSafari made the point that education along with good governance and infrastructure is needed to deliver large scale deployment of renewables in Africa.

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The Thematic Panel

5.There are opportunities for developing countries to trade in this green economy..However, as Steven Stone of UNEP argued exporters will have to compete on quality not price. Aid for Trade (ie. technical assistance) can support countries to move up the value chain in this respect providing advice to policy makers, SMEs and trade support institutions.

Whilst the message was positive about the mutual supportiveness between trade and climate regimes, the sheer enormity of the climate change challenge may well present challenges to the trading system. Issues like green subsidies, carbon pricing, border carbon adjustments and fossil fuel subsidies have implications for how trade is regulated. – no doubt this will feature in future discussions in Geneva.Today was another step towards enabling the trade community to find the right tools to confront the climate crisis.

 

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