Due to dropping lake levels, the Panama Canal authorities restricted the largest ships in April. The canal uses freshwater and conducts 6% of worldwide maritime trade. Chinese Yangtze River shipping has also changed.
Industrial patterns and international trade effects on climate are increasingly studied and disputed. The UN Climate Change Conference (COP28), which begins in Dubai on November 30, will focus on commerce for the first time. Set the stage “for the international trade community to step up their role” to elevate marketing as a climate action lever.
This discussion will be led by the World Trade Organization (WTO), which will conduct its 13th Ministerial Conference (MC13) in Abu Dhabi, UAE, in February next year.
The trade-environment tango has troubled India and other developing nations. India and South Africa’s WTO discussion document claimed trade measures instead of NDC implementation and climate finance and technology transfer solutions endangered justice and equity. Nationally Determined Contributions underpin the Paris Agreement.
The proposed environment- and climate-related trade policies should respect WTO members’ social and economic development needs. The two countries stressed these suggestions should not be arbitrary or disguised trade barriers or unjustified discrimination.
On the table again:
EU initiatives like the Carbon Border Adjustment Mechanism (CBAM) and deforestation rules punish exporting nations that adopt carbon-intensive measures or deforest for production and export. India has vehemently opposed the CBAM, calling it a trade barrier. Still, the UK’s consultation proposal to address carbon leakage risk to boost decarbonization has raised suspicions in India during advanced bilateral trade deal negotiations.
The goal goes beyond economies’ carbon border taxes. It includes the WTO’s enhanced climate regulation discussion, a typically neglected area.
In July 2014, WTO countries began negotiations for the Environmental Goods Agreement (EGA) to reduce tariffs on solar panels and wind turbines. China and the West disagreed on “environmental goods”, and the EGA talks collapsed in 2016. However, efforts to reach a climate pact at the WTO ministerial (MC13) have revived environmental concerns.
The EU and over 50 nations created the Coalition of Trade Ministers on Climate in January to promote climate, trade, and sustainable development cooperation. In November 2020, Trade and Environmental Sustainability Structured Discussions (TESSD) was founded to determine WTO priorities.
The Fossil Fuel Subsidy Reform Initiative and WTO plastic pollution negotiations aim to solve environmental issues. These talks affect India, a prominent plastic exporter and fossil fuel subsidy provider. The WTO Committee on Trade and Environment promotes climate change trade rule debate among member countries.
Since most WTO members are represented at the UNFCCC and participate in its negotiated outcomes, India believes non-trade issues like the environment should be handled there. The Netherlands and South Africa have asked WTO members to consider all countries’ common but distinct obligations and capabilities when implementing environment and climate-related trade measures.
Each country has regulatory flexibility to reduce emissions economy-wide using the means it chooses. There are no sector-specific targets at UNFCCC. NDCs under the Paris Agreement of the UNFCCC have regulatory heterogeneity, “the paper states.
Given varied national conditions, UNFCCC agreements are founded on the principles of common but differentiated responsibilities and respective capabilities (CBDR-RC) and the parties’ NDCs. Most historical and current global greenhouse gas emissions came from rich countries, and per capita emissions in developing countries remained modest.
The US opposed India’s proposal to bring common but differentiated responsibilities into WTO, saying trade could help combat climate change by facilitating and promoting trade in environmental goods and services and incentivizing decarbonization in energy-intensive commodities.
The way forward:
Biswajit Dhar, a distinguished professor at the Council for Social Development, warns India would open Pandora’s box by discussing climate change at the WTO.
“That will establish a highly discriminating trading system. By pushing through the WTO, industrialized countries’ national standards will become international. What if rich nations say India’s rice agriculture produces methane and other climate gases? Dhar asks.
However, former WTO deputy director general Anwarul Hoda argues India should discuss climate action at the WTO because environmental damage is urgent.
“I argue climate issues are too urgent, not yielding under pressure. Rising temperatures would reduce wheat and milk production in hot countries like India. Hoda said countries should start climate action negotiations at MC13 because time is running out. “A multilateral agreement will also prevent unilateral measures like CBAM.” He believes India should negotiate a WTO environment pact with the most extended transition period.
Dhar advocates UN specialist agencies developing enforcement methods to curb global warming. It is commonly known that developing countries can only meet climate commitments with technology and financing. Despite the Kyoto Protocol and Paris Agreement, how committed were developed nations to developing nations? He believes they will threaten UNFCCC’s noncompliance with consequences like the carbon border tax.
Climate divisions may further destabilise the WTO, which already appears ineffective.
