How Can Trade Rules Support Environmental Action?

There is a vital need for countries to intensify environmental and climate action. Existing climate policies set us on a path to global warming of about 3 ̊C above pre-industrial levels. Human action threatens the extinction of 1 million plant and animal species, compromising food security and livelihoods. Plastic and other forms of pollution are destroying land and water resources around the world.

In the past, observers clashed over whether trade and investment exacerbate unsustainable economic models. For example, some pointed to trade-related transport emissions and to the potential for a “race to the bottom” on environmental regulation to attract investment.

Today, some stakeholders note that efforts to “green” value chains are being held back by trade rules that are not well-adapted to sustainable, circular business models. At the same time, extreme weather events are jeopardizing supply chains and infrastructure, while environmental damage is affecting certain trade-based livelihoods.

As such, conversations are shifting towards aligning trade and investment with the Sustainable Development Goals. Global trade has lifted millions out of poverty and accelerated innovation. Efforts must now be made to ensure that it supports environmental action, alongside continued growth. It is no longer a choice but, rather, an imperative to make international trade a central part of the solution to the environmental challenges we face.

This briefing summarizes efforts to date to use trade mechanisms to support environmental goals (see box) and outlines five ways in which trade rules could be further deployed for a greener global economy. These proposals are designed to respond to public- and private-sector leaders’ increased interest in how trade policy can deliver on global challenges. Suggestions are also made for better stakeholder engagement to improve the links between trade rules and sustainability action.

The impetus for action will only be credible, however, if governments reach a deal to end harmful fisheries subsidies this year at the World Trade Organization (WTO) as foreseen in SDG 14.6. One-third of the world’s fish stocks are over-exploited, yet an estimated $22 billion in public spending each year continues to support overfishing. It is incumbent on trade policy-makers to show they can take action on important environmental goals.