WTO Secretariat

The WTO and the environment — will the 2020s be different in terms of trade policies that are environmentally supportive?

With the world rapidly approaching the point of no return on rising temperatures, can an organization like the WTO characterized by negotiating paralysis play a meaningful role in seeing that trade rules support sustainable growth and a livable planet in a timely manner?. Recent history would suggest the answer is no or at least not in a timely manner.

Fisheries subsidies negotiations have dragged on for more than two decades, suggesting that even if a robust trade and environment work program is agreed to at the WTO’s 12th Ministerial Conference, the chances of meaningful progress in the current decade are modest at best.

The negotiations for an environmental goods agreement amongst 17 countries and groups accounting for 90% of trade in environmental goods which began in 2014 was essentially discontinued in 2016 despite the obvious global benefit from tariff reductions on the trade in goods that can improve the environment. While many have urged the restart of the talks, it is unclear whether talks will restart and how quickly they could conclude.

There are no ongoing negotiations to address the need to reduce the carbon footprint of industry and agriculture despite some 69 countries having adopted some form of carbon price and the impending start of carbon border adjustment measures (“CBAMs”) by some WTO Members. A global agreement on a carbon price is aspirational at this point without negotiations agreed to or started. Countries working to reduce carbon emissions are concerned about “leakage” of production and jobs to countries with low standards ensuring that there will be CBAMs imposed by some. Some WTO Members are threatening retaliation if such measures are adopted. So the 2020s will likely be a period of conflict among WTO Members on the topic instead of being a period of time in which the WTO and its Members are able to make a critical contribution to controlling the global warming crisis.

Efforts at plurilateral agreements (so-called Joint Statement Initiatives or JSIs) which include some in the environmental area (e.g., marine plastics pollution) are not certain to become part of the WTO, facing opposition from India and South Africa and others.

So recent history does not shout out that the WTO will play an important role in addressing the existential threat flowing from global warming.

This is not to say that the WTO Director-General isn’t advocating for trade to play its role in addressing the problems. Moreover, the Secretariat is attempting to generate information on the role trade can play in addressing global warming through a series of information notes. See, e.g., WTO news, DG Okonjo-Iweala highlights trade’s role in ambitious and just climate action at COP26, 2 November 2021, https://www.wto.org/english/news_e/news21_e/clim_02nov21_e.htm; WTO news, WTO issues information briefs on trade, climate, related issues with COP26 talks underway, 3 November 2021, https://www.wto.org/english/news_e/news21_e/clim_03nov21_e.htm. The press release reviewing DG Ngozi’s statement is copied below.

“Trade can and must make a contribution to a comprehensive climate action agenda, Director-General Ngozi Okonjo-Iweala declared in her engagements with world leaders and stakeholders at the United Nations COP26 Climate Summit in Glasgow, Scotland, highlighting the need for ambitious yet fair commitments that ensure a green transition that is just and inclusive to all economies.

“The Director-General highlighted trade and the WTO’s role in a wide breadth of approaches to climate action in her panels and bilateral meetings, covering carbon emission reductions, the conservation of forests as critical carbon sinks, climate adaptation, and finance.

“On carbon reduction and pricing, she championed a coordinated approach at the high-level event organized by Canada and the Carbon Pricing Leadership Coalition, saying: ‘Let’s move towards a global carbon price. We have a great deal of fragmentation and we are hearing increasingly from businesses that they are finding regulations difficult to navigate and sometimes it results in higher prices for consumers and others. We also have members who are afraid this measure is somehow disguised protectionism which will prevent them from selling products abroad. Their issues need to be respected as we develop these systems.’

“’The WTO provides a forum where we can initiate this dialogue and involve developing and least-developed countries in the conversation. Leaders should task the International Monetary Fund, Organisation for Economic Co-operation and Development, World Bank and the WTO to work together and come up with a global approach,’ she said.

“Halting deforestation and establishing sustainable markets for agriculture must also be part of the comprehensive trade and climate agenda, she said at a session of the World Leaders Summit on Forests and Land Use, organized by the United Kingdom, host of COP26, and the UN Framework Convention on Climate Change. WTO members have already notified an increasing number of policies relating to forestry management (514 measures from 2009 to 2019) as well as sustainable agriculture management (over 1,200 measures). However, more action is needed, such as reforming subsidies that create perverse incentives for market actors to deplete natural resources, the Director-General said.

“At the Africa Adaptation Acceleration Summit, moreover, the Director-General said: ‘Adaptation for Africa must be a priority for the international community. This region contributes the least to emissions but suffers the most. Climate finance for Africa to meet adaptation costs must be ramped up.’

“’We also need to put in place trade policies to cushion against and adapt to the negative impacts of climate change. Trade is part of the solution,’ she said, noting the need for trade to ensure food security in the face of climate threats, provide access to adaptation technologies, and create synergies in Aid for Trade and climate finance.

“The Director-General will also underline the importance of support for developing countries and least developed countries (LDCs) at the 3 November event organized by the United Kingdom on mobilizing climate finance.”

The five information papers released from the Secretariat on November 3, 2021 are:

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°1, MAPPING PAPER: TRADE POLICIES ADOPTED TO ADDRESS CLIMATE CHANGE, https://www.wto.org/english/news_e/news21_e/clim_03nov21-1_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°2, CLIMATE CHANGE IN REGIONAL TRADE AGREEMENTS, https://www.wto.org/english/news_e/news21_e/clim_03nov21-2_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°3, TRADE RESILIENCE IN THE FACE OF A RISING BURDEN OF NATURAL DISASTERS, https://www.wto.org/english/news_e/news21_e/clim_03nov21-3_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°4, CARBON CONTENT OF INTERNATIONAL TRADE, https://www.wto.org/english/news_e/news21_e/clim_03nov21-4_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°5, AFRICA UNDER A CHANGING CLIMATE: THE ROLE OF TRADE IN BUILDING RESILIENT ADAPTATION IN AGRICULTURE, https://www.wto.org/english/news_e/news21_e/clim_03nov21-5_e.pdf.

A former Deputy Director-General of the WTO, Alan Wolff, in comments to the Harvard JFK School last week, identified a third required outcome of the WTO’s 12th Ministerial Conference (besides a statement on trade and health and the conclusion of the fisheries subsidies negotiations) to be —

“3. A clear pledge to deal with trade and climate, and other environmental issues (marine plastics pollution, fossil fuels, etc. – this last, probably unspecified).

“• The effort is likely to take the form of an open plurilateral negotiation, a joint statement initiative. This is now a path more often chosen, as agreement among 164 disparate sovereigns is becoming close to impossible to achieve.”

See Defining Success for MC12, Notes for remarks of Alan Wm. Wolff, Peterson Institute for International Economics, Harvard JFK School, 29 October 2021, https://www.piie.com/sites/default/files/documents/wolff-2021-10-29.pdf (page 3).

While the start of a JSI on trade and climate is the most that can be hoped for at the Ministerial, even if achieved, the question will be can progress be made quickly enough to affect global warming. The fact that the scope of any such negotiations is uncertain strongly supports the view that efforts at the WTO on a plurilateral or multilateral basis will be too limited and too late to make a difference.

This will likely mean any meaningful movement will be implemented by individual Members or potentially small groups and probably occur outside of the WTO. In the absence of global or plurilateral agreements, actions by individual Members will be needed but almost certainly not enough.

Let’s hope that the above analysis proves too pessimistic. For our children and grandchildren, a lot depends on a global robust response to global warming in many policy areas, including trade.

UPDATE: WTO Trade Policy Review Press Releases Corrected to Include Full Secretariat and Government Reports in reviews of the Republic of Korea and China

In yesterday’s post, I reviewed the fact that beginning with WTO Trade Policy Reviews in October 2021, the WTO press releases on the reviews were not including information that has historically been included, importantly the full Secretariat Report and the Government Report of the Member going through the review. See October 20, 2021:  WTO reduces transparency of Trade Policy Reviews — what is the possible justification?, https://currentthoughtsontrade.com/2021/10/20/wto-reduces-transparency-of-trade-policy-reviews-what-is-the-possible-justification/. The structure of the press releases was also changed, and the press releases no longer refer to the minutes or the written questions and answers which prior to October had been noted as likely to be released in about six weeks and to which links to the releases had been added once the documents were released.

Yesterday afternoon and evening, I received word from folks at the WTO that there was no intention to reduce the transparency of TPR events, and they were reviewing what might have happened in the Korea and China reviews. Last evening, I was informed that the problem had been discovered and corrected. The posted press releases for the Korea and China reviews were updated to include links to the full reports of both the Secretariat and the Government being reviewed. See WTO press release, Trade Policy Review: China, 20 and 22 October 2021, https://www.wto.org/english/tratop_e/tpr_e/tp515_e.htm (adding links to TRADE POLICY REVIEW REPORT BY THE SECRETARIAT, CHINA, 15 September 2021, WT/TPR/S/415 (209 pages) and to TRADE POLICY REVIEW REPORT BY CHINA, 15 September 2021, WT/TPR/G/415 (27 pages)); WTO press release, Trade Policy Review: Republic of Korea, 13 and 15 October 2021,https://www.wto.org/english/tratop_e/tpr_e/tp514_e.htm (adding links to TRADE POLICY REVIEW REPORT BY THE SECRETARIAT, REPUBLIC OF KOREA, 8 September 2021,WT/TPR/S/414 (229 pages) and to TRADE POLICY REVIEW REPORT BY REPUBLIC OF KOREA, 8 September 2021, WT/TPR/G/414 (15 pages)).

The corrections made by the WTO Secretariat are obviously appreciated by the public who follows WTO activities. It is welcome news that the problem on TPR documents was inadvertent and not intentional. WTO Members have over the last 25 years taken many actions which have significantly reduced transparency in a range of areas which I have reviewed in prior posts. See, e.g., November 12, 2019: The Continued Problem of Inconsistent Transparency at the World Trade Organization, https://currentthoughtsontrade.com/2019/11/12/the-continued-problem-of-inconsistent-transparency-at-the-world-trade-organization/. The Secretariat, of course, becomes captive to those actions with the result that many Secretariat generated documents (e.g., compilation of proposals) that used to be public are often not today. Thus, the public should be concerned about reduced transparency at the WTO and flag problems where identified.

On the Trade Policy Review press releases, the Secretariat should also note that the language of the press releases for Korea and China remain modified from prior releases in that there is no indication as to when minutes or written questions and answers will be available. I assume based on the communications from WTO personnel, that both the minutes and written questions and answers will be released as well in a few months. If not, then my concerns from yesterday on reduced transparency would remain. While such documents trail the release of the full reports, they are critical documents as well to understand concerns with any Member’s trade policies. Historically, the Secretariat would update the press release so that those following reviews could easily find the minutes and written questions and answers when released by simply looking at the press release. I would encourage the Secretariat to see that such information is added back into notices going forward and, if not done immediately for Korea and China, added at the latest when the documents are released.