Trade, climate change and a “just transition”

International trade agencies joined forces this weekend to hold an event in the Marrakesh UNFCCC COP22 about how trade can contribute to the implementation of the Paris Agreement. The agreement provides a framework for countries to commit to reducing greenhouse gas emissions. For the first time, trade was officially on the agenda for discussions. This was a constructive step and built on the dialogue hosted by the LDC Group and ITC in Geneva in which the relationship between trade and climate change was explored.

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Trade and climate change expert panel at COP22 Marrakesh

Representatives from ITC, UNCTAD, WTO, IFAD and UNFCCC spoke with Peter Wooders from IISD moderating. Some of the main themes that emerged included the following:

  • The UNFCCC delegate highlighted that trade is implicitly recognized in Article 2 of the UNFCCC Convention “…to enable economic development to proceed in a sustainable manner.” It is also referred to more explicitly in the Kyoto Protocol article 2.3 “The Parties included in Annex I shall strive to implement policies and measures under this Article in such a way as to minimize adverse effects, including the adverse effects of climate change, effects on international trade, and social, environmental and economic impacts on other Parties, especially developing country Parties”
  • Trade liberalization speeds up the dissemination and increases innovation and investment in low carbon technologies – the plurilateral goods negotiations in Geneva are important in this respect. Given the bundling of services with environmental goods e.g. the maintenance of wind turbines, a trade liberalization agreement on services and inclusion of more developing countries will be important to drive further emissions reductions.
  • Implementing the Agreement through climate policies (known as “response measures” in the jargon) will have an impact on industries and employment. Low carbon sectors e.g. renewables and public transport will benefit whilst fossil fuel intensive sectors will suffer. Ensuring a “Just Transition” i.e. minimizing negative social impacts is necessary. This will be an increasingly important priority on the development agenda.

Earlier in the day, ICTSD held an event on the same subject. Similar messages emerged from the presentation, that trade is mutually supportive to the climate regime. The private sector were represented on the panel with a wind turbine association and large French energy group. Both advocated for a price on carbon and the removal of fossil fuel subsidies. The trade implications in terms of border carbon adjustments were discussed.

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