International trade and stronger cooperation can amplify global action to tackle climate change and put the planet on a sustainable path, says the World Trade Organization (WTO).
In its World Trade Report-Edition 2022, released earlier this week – on the sidelines of the 27th United Nations Conference on Climate Change (COP27), held in Sharm el-Sheikh (Egypt), the International Organization considers that global trade must be a cornerstone of climate action.
The WTO’s flagship publication, which explores the different facets of the relationship between international trade and climate change, points out the WTO, “argues that trade is a positive force for climate and part of the solution to achieve to a low-carbon, resilient and just transition,” said WTO Director-General Ngozi Okonjo-Iweala.
“It examines how international trade is likely to exacerbate climate change, how the consequences of climate change could alter trade patterns and trade relationships, and how trade could serve as a catalyst for the global response to the climate crisis” , explains the International Organization.
While viewing trade as a key lever for transforming the global economy and setting the planet on a sustainable path, the World Trade Report is built around four main messages.
The first message is a reminder that climate change is a major threat to future growth and prosperity due to potential productivity losses, production shortages, damaged transport infrastructure and supply chain disruptions.
It further argues that “without significant reductions in global greenhouse gas (GHG) emissions, many countries are likely to see their comparative advantages shift, with agriculture, tourism and some manufacturing sectors particularly vulnerable to climate impacts. “.
The second message is that trade is a force multiplier for countries’ adaptation efforts in the face of climate disruption, reducing the costs of technologies and essential goods and services.
The WTO is certain that “in the longer term, open international markets would help countries make the necessary economic adjustments and reallocation of resources”, especially for the most vulnerable economies – the least developed countries, the small island developing and landlocked developing countries.
The third message argues that trade can reduce the cost of climate change mitigation – by supporting the reduction or prevention of GHG emissions – and accelerate the transition to a low-carbon economy and the creation of green jobs. .
Indeed, as the Organization explains in a press release, “WTO simulations presented in the report suggest that the elimination of tariffs and the reduction of non-tariff measures on a subset of environmental goods to energy could boost exports by 5% by 2030, while the resulting increases in energy efficiency and renewable energy adoption would reduce global emissions by 0.6%.”
Also noteworthy is the fourth message, which argues that international cooperation on the commercial aspects of climate policy is essential to make climate action more effective and the low-carbon transition fairer, by minimizing trade frictions and investor uncertainty.
The authors of the report are confident that the world will not achieve the Paris Agreement goal of limiting global temperature rise to well below 2 degrees Celsius without global cooperation around ambitious climate policies.