Ten “Quick Wins”
for Trade and the Environment

Humanity must change its consumption patterns to limit greenhouse gas emissions and achieve the goals set out in the Paris Climate Agreement. This requires effort from all market participants, from producers to end-users, to accelerate the adoption of green products and services in all areas, such as energy, infrastructure, transport, and household consumption. The primary challenge is how to make these products and services available to all market participants, including ordinary citizens and small businesses. One thing is certain–the world cannot decarbonize without trade. Countries should make efforts to agree on joint green standards and eliminate tariffs and other trade barriers globally on “green” goods. This is possible with the revival and modernization of the stalled negotiations for an Environmental Goods Agreement (EGA).

Overfishing is a major sustainable development challenge. The Food and Agriculture Organization (FAO) estimates that over 35% of assessed fish stocks are over-exploited. This creates an imbalance in marine ecosystems and undermines the livelihoods of communities that depend on fishing for their food and income. Subsidies are a big part of the problem. When they reduce the cost of fishing they enable vessels to catch more than would otherwise be economically feasible and often more than fish stocks can sustain. Subsidies can also deepen inequality: researchers estimate that around 80% of fisheries subsidies go to large-scale fishing, and only 20% to small-scale or artisanal fishing.

Industrial policy is increasingly the tool of choice for major economies seeking to address pressing global concerns such as fighting climate change, pandemics, or supply-chain vulnerabilities. While some WTO members view current rules as limiting government action, others are concerned that existing rules are insufficient to avoid subsidy wars or trade conflicts. Both are right. There are several ways that rethinking these rules could balance out these competing priorities and ensure a more equitable, resilient, and sustainable trading system.

Every year, governments across the world provide large amounts of support to the fossil fuel industry. The OECD and the IEA estimate that, in 2021, fossil fuel support amounted to almost 700 billion USD among the major economies. These policies raise trade and environmental concerns because they give a cost advantage to certain domestic firms (typically operating in emissions-intensive industries) to the detriment of foreign firms that produce like products using more costly unsubsidized inputs. By incentivizing the production and consumption of fossil fuels, such government support also undermines national and international efforts to reach the goal of net-zero emissions in 2050.

Climate change is a pressing global challenge that demands collective efforts and innovative solutions. Trade provides multiple pathways to address the profound impacts that climate change will have on people’s lives. In particular, multilateral and regional trade agreements can help protect and preserve the environment in three ways: by catalyzing cooperation among countries, accelerating access to environmental goods and services (EGS), and ensuring equity towards developing countries.

The global challenge of climate change severely threatens the agriculture sector, particularly in developing countries. Over 2 billion people in these nations depend directly on agriculture for their livelihoods, which is highly vulnerable to climatic shifts. Rainfall variability, increasing temperatures, and extreme weather events are compromising food security for countless communities. Climate change poses additional risks such as reduced crop yields and increased pestilence, which affects the livelihood of millions of small-scale farmers in developing countries.

The plastics crisis is a major crisis of our time. Plastic production has increased more than 200% in the last decade, and the United Nations estimates that approximately 75% of all plastic produced since 1950 has become waste. The way we produce, use and dispose of materials in the current linear economy is directly linked to plastic pollution. Studies show that a business-as-usual approach would triple the annual flows of plastic into the ocean by 2040. Adopting a circular economy for plastics can be a solution to this crisis but it requires substantial international coordination and alignment.

Several international crises, from COVID-19 to the war in Ukraine, have laid bare the challenges of an interconnected global economy. Governments are increasingly taking action to make supply chains more resilient to vulnerabilities but also thinking through how to improve the sustainability of current production and consumption patterns. While many businesses have also been proactive in taking steps to “green” their supply chains, not all are equipped to make the shift. Governments can accelerate this green transformation through targeted capacity building that makes sustainable solutions more accessible and commercially viable. Trade and multilateral cooperation play critical roles in this endeavor.

Tackling climate change is the most pressing issue of our time. To solve it, we need to change our traditional patterns of production, as well as our networks of economic cooperation. While everyone is impacted by climate change, developing countries are currently set to carry the brunt of the crisis by being both disproportionately vulnerable to its impacts and having less access to financial resources to shift to green technology. Investment in developing country economies is needed to ensure that the green transition proceeds equitably around the globe.

The role of trade in improving the environment and supporting the sustainable development goals has increasingly come into focus. The recent conclusion of the WTO Agreement on Fisheries Subsidies, the first multilateral agreement that made a significant contribution to advancing one of the SDGs, has shown what is possible when members align their efforts on trade and sustainability. Meanwhile, several free trade agreements (FTAs) have made considerable progress in incorporating environmental or sustainable development chapters which support greener trade. These avenues to advancing trade and environmental goals not only complement each other, but can also advance innovative rulemaking and dialogue.