An effective strategy for tackling global warming cannot be successful without governments taking into account the important role of trade in meeting climate goals, the Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, has said.
She noted that the World Trade Report maps out pathways for governments on how to use trade to support national action plans, known as nationally determined contributions (NDCs), for tackling climate change.
“There is one big missing issue in what we need to do to fight climate change, and that is the absence of trade and trade policies in the nationally determined contributions and national adaptation plans. We cannot afford to leave trade and WTO behind” in this effort,” she said.
“The reason we’re here to launch this report is that we want to make that point, and to offer specific recommendations and some actions that countries can take and fold into the revision of their plans,” the Director-General added.
Mrs Okonjo-Iweala said this during a high-level event with world leaders during the COP27 climate summit in Sharm El-Sheikh, Egypt, to mark the launch of the WTO’s World Trade Report, which this year focuses on climate change and international trade.
Mrs Okonjo-Iweala also noted the important role of financing in helping developing countries address the challenges of climate change and urged rich nations to meet their commitment to jointly provide $100billion annually to support climate action in these countries.
Coupled with the financing and trade action should be support for investment, the Director-General said.
She pointed to the WTO’s Aid for Trade programme, which seeks to mobilise resources to address the supply-side and trade-related infrastructure obstacles identified by developing and least-developed countries.
According to her, $48.7 billion was disbursed last year for such support, of which 31 percent was allocated for climate-related actions saying “this is something we can work on, to push more of that towards climate-related goals.”
The Director-General also noted that the WTO is working with the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development, and other organisations on a global carbon pricing framework.
“The WTO is examining how to work in criteria that take into account the amount countries pollute and national income levels so that members accounting for a small share of global carbon emissions will find such a framework more acceptable,” she said.
The World Trade Report indicates trade actions that can help countries meet the challenge of moving to net-zero emissions by mid-century and harnessing trade as a force multiplier for climate mitigation and adaptation efforts.
Examples of such trade actions include opening up trade in environmental goods and services, improving cooperation on carbon measurement and verification, and transforming the WTO’s Aid-for-Trade initiative into an investment programme that expands opportunities for sustainable trade in less affluent nations.
International cooperation on trade-related climate policy, such as carbon pricing and decarbonisation standards, can also minimise trade frictions and investor uncertainty arising from unilateral climate actions, which may in turn impose disproportionate costs on firms and governments in developing countries.
The WTO can play a valuable role as a venue for transparency and potential harmonisation of such measures, the report notes.
The Director-General was joined at the event by the IMF Managing Director Kristalina Georgieva, Prime Minister Mia Mottley of Barbados, and French Minister for Europe and Foreign Affairs Catherine Colonna.