Today, the World Economic Forum (WEF), the World Trade Organization (WTO) Secretariat and the World Bank Group announced their pilot initiative, Action on Climate and Trade (ACT), to help developing economies leverage trade and meet their climate change adaptation and mitigation goals.
The three organisations will work with participating developing economies to develop climate-related analysis specific to their trade circumstances. Domestic stakeholders will be involved in the analysis through public-private dialogues.
Sean Doherty, head, international trade and investment, World Economic Forum said, “Urgent action is needed to meet climate goals. Many companies are undertaking supply chain decarbonisation and looking to green trade. Developing economies must be empowered to identify new opportunities and shape a future net-zero global economy.”
All economies are at a critical juncture for tackling climate change and growing sustainably. Trade as an engine of economic growth must be aligned with these objectives. As highlighted in the WTO World Trade Report 2022, global cooperation on international trade and related investment needs to be mobilised to enhance the mitigation of and adaptation to climate change, support a just low-carbon transition and minimise trade frictions.
Hoe Lim, director, trade and environment division, WTO said, “The climate crisis is calling for rapid and effective collective action using every tool in the toolbox. Trade policy offers WTO members, including developing-country members, a wide variety of options to enhance their climate change adaptation and mitigation strategies.
This new pilot initiative by the World Bank Group, the World Economic Forum, and the WTO Secretariat will focus on supporting developing members to leverage trade to improve their climate resilience and decarbonisation plans in a way that is aligned with their specific needs and local circumstances.”
The World Bank Group report, The Trade and Climate Change Nexus, further highlights that all developing economies have much to gain by improving their policies on trade and the environment.
Mona Haddad, global director for trade, investment and competitiveness, World Bank Group said, “By prioritising sustainable practices and harnessing the power of international trade, developing countries can not only mitigate the impacts of climate change but also create new economic opportunities and build a better future for their citizens.”
World Economic Forum communities have identified 25 technologies and accompanying services that trade policy-makers should prioritise to accelerate emission reductions. These technologies sit across five categories found in many economies’ climate action plans:
- Energy supply
- Carbon capture and storage (CCS).
The Forum believes business supply chains must be an important driver of sustainability and that trade policy can play a positive role in addressing inclusive trade challenges.
ACT will provide developing economies with tailored insights to best plan for trade impacts from climate change, leverage climate-trade opportunities and define areas of collaboration with trade partners.
In particular, unique country-level analysis will explore how trade policy tools can promote a country’s climate change adaptation and mitigation strategies – including options that could help deliver or improve the participating country’s National Adaptation Plans or Nationally Determined Contributions under the Paris Agreement on climate change.
ACT offers participating economies a multi-stakeholder, bottom-up model for exploring specific ways in which trade can be leveraged to enhance climate change mitigation and adaptation efforts. Egypt has taken an interest in the ACT and is likely to join the pilot phase.
In addition, ACT will help policy-makers and stakeholders in developing economies engage in global processes where appropriate, such as the WTO’s Committee on Trade and Environment, and Trade and Environmental Sustainability Structured Discussions. It can also support developing economy engagement in the recently launched Coalition of Trade Ministers on Climate.
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