Tackling global warming cannot be successful without governments taking into account the important role of trade in meeting climate goals, according to Director-General Ngozi Okonjo-Iweala.
Speaking at a high-level event with world leaders during the COP27 climate summit in Sharm El-Sheikh, Egypt, Okonjo-Iweala’s speech on November 8 marked the launch of the WTO’s World Trade Report, focusing on climate change and international trade.
The Director-General noted that the World Trade Report maps out pathways for governments to use trade for supporting national action plans––known as nationally determined contributions (NDCs)––for tackling climate change.
Each party to the UN’s 2015 Paris Agreement, which sets the target of limiting global warming to 1.5°C, is required to establish an NDC and update it every five years.
Okonjo-Iweala said, “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.”
“The reason we’re here to launch this report is because 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 was joined at the event by International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Prime Minister Mia Mottley of Barbados, and French Minister for Europe and Foreign Affairs Catherine Colonna. Alok Sharma, President of the 2021 COP26 in Glasgow, Scotland, moderated the event.
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 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 $100 billion annually to support climate action in these countries.
Coupled with the financing and trade action should be support for investment, the DG said.
She noted 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.
She noted that $48.7 billion was disbursed last year for such support, of which 31% was allocated for climate-related actions.
“This is something we can work on, to push more of that towards climate-related goals,” Okonjo-Iweala declared.
The Director-General also noted that the WTO is working with the 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.