WTO Public Forum 2021 reflects on need to strengthen collective action towards sustainable trade

Participants in the WTO Public Forum called for collective action to address urgent challenges associated with sustainable trade, such as the overexploitation of fish stocks, the establishment of regulatory and policy principles on carbon border adjustments and the promotion of international standards on environmental goods. Representatives from governments, non-governmental organizations and businesses stressed that sustainability is a powerful driver for resilience to crises such as the COVID-19 pandemic and underlined the important role the WTO should play in paving the way for a stronger trade and environment agenda.

In a session organised by the Pew Charitable Trusts and International Institute for Sustainable Development (IISD), participants discussed what a potential WTO fisheries subsidies deal would mean to sustainable development and why it matters for the oceans and for trade. A successful WTO agreement on curbing subsidies for overfishing could pave the way for a stronger multilateral trading system and open discussions of how its implementation will be a catalyst for sustainable trade and a sustainable future.

Speakers called on WTO members to prove that free trade and sustainability can go hand in hand by reaching consensus on fisheries subsidies at the 12th Ministerial Conference to be held on 30 November – 3 December. The stakes are high, participants acknowledged, and some sticking points, including special and differential treatment (S&DT), the shortage of detailed fisheries data, cross-border fish stock management and supporting livelihoods of small-scale fisherfolk, need to be resolved.

Panellists emphasized that the objective of fisheries subsidies reform should not be to prohibit subsidies, but to repurpose and redirect subsidies to people who need it and to achieve sustainable development. The importance of technical assistance and capacity building was underlined as a means to improve living standards of small-scale fisherfolk and help developing and least developed countries (LDCs) to achieve their economic, environmental and social goals. 

At a session organised by the Confederation of British Industry (CBI), the discussion focused on accelerating the race to net-zero emissions by using trade policy to support trade in low carbon goods. Ahead of the UN Climate Change Conference (COP26), panellists looked at how best to relaunch work on the WTO’s Environmental Goods Agreement and how to transform the traditional narrative of trade being one of the main contributors to climate change to being the solution. This includes reforming fossil fuel subsidies and linking trade with climate standards. The panellists also noted the importance of environmental services as they support the operations and trading of environmental goods and called for an examination of both tariffs and non-tariff barriers to trade.

Jean-Marie Paugam, WTO Deputy Director-General, noted a change of paradigm across countries, including in trade policy. “While the environment was previously seen as a cost, an obstacle to economic growth”, he said, “the main obstacle to economic growth is now seen as being unsustainable trade. The world is turning to trade policy, on issues like green finance, with the idea that trade should be part of the solution.” How to promote the dissemination of technologies more favourable to the environment features in many of the discussions, DDG Paugam said, noting the intention of many WTO members to liberalize climate-related trade.

Participants in this session noted that in addition to decarbonizing trade, it is important that countries trade in goods and services that will help climate adaptation. Because this is critical for developing countries, they will need enhanced access to finance, know-how, technology transfer and investment to support their transition to a low carbon economy, they said. Working with markets will be absolutely necessary to deliver this transition and countries should avoid a “buy local” mindset.

The Global Business Coalition (GBC) gave the floor to emissions-intensive and trade-exposed industries (chemical, steel and logistics) to outline the main challenges they face in dealing with the impact of trade on the environment, protecting biodiversity, promoting the circular economy, and reducing their carbon footprint. Representatives of these industries illustrated what they are doing to manufacture and trade responsibly and put forward concrete proposals for regulatory and policy principles to consider when thinking of carbon border adjustment mechanisms (CBAM).

The European Union CBAM, aimed at preventing the risk of carbon leakage and supporting the EU’s ambition on climate mitigation, took centre stage in the discussion. Panellists spoke of its impact as companies move production from Europe to areas with less stringent environmental regulations, affecting sectors such as steel, aluminium, cement, fertilizers and electricity. Similar initiatives are being studied in the United States, Canada and the United Kingdom, but the international community should find a way to act collectively and agree on a multilateral approach at the WTO, they said.

Speakers noted that if everybody had the same regulatory framework and the same carbon price, there would be no need for a carbon border adjustment mechanism. In that regard, COP26 and the WTO should work hand in hand; COP26 to ensure that domestic policies are put in place and the WTO to establish a multilateral framework that prevents environmental trade wars and ensures that climate measures do not become a form of disguised protectionism.

Business representatives agreed on the need to break the dichotomy of “trade or the environment”. They stressed the key role international organizations and governments must play in raising national and global public awareness in order to foster more environment-friendly ways of trading. Brands and manufacturers will eventually transform as consumers decide which products to buy based on the impact their decision has on climate change and sustainability, they said.

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