We need better alignment between climate and trade. Here’s a roadmap

To break down silos, trade policy-makers and their environmental counterparts need to talk to each other more. Here, there is some important work underway. For example, UN Environment, UNCTAD and the OECD each support greater interaction between environmental policy-makers and trade negotiators. But more is required. That is why the International Chamber of Commerce is hosting the heads of UN Environment and the WTO at this week’s Davos conference to discuss how to promote stronger alignment of trade and climate regimes, and how to get business more involved in this important mission.

To date, international talks on climate and trade have been conducted in separate forums. At the most recent climate talks (COP25 in Madrid), there was very little visible interaction between the climate and trade communities. At the WTO, there is a reluctance among too many governments to engage proactively – even in dialogue – on trade-related challenges and opportunities with regard to climate action. And curiously, many of the governments pushing for climate ambition at COP are not pushing for the same climate ambition at the WTO.

Governments must ensure more systemic interaction in national capitals on the trade and climate nexus, between international organisations active on these issues, and with business and civil society stakeholders. Critically, this must extend to more dialogue among and with developing countries on efforts to address the intersection of climate and trade.

Second, there needs to be more serious thinking around the complex issues of policy coherence on trade and climate. Both trade rules and climate policy are incredibly complicated, and aligning the two regimes will be difficult, from a policy, legal and technical standpoint.

The multilateral trading system has a vital role to play in achieving the world’s climate goals. Cooperative, multilateral approaches are essential for ensuring the effectiveness and fairness of emerging climate policies, especially where supply chains for products and services are distributed across the globe, and even those businesses most committed to climate action have competitiveness concerns.

On climate and trade, policy actions like climate waivers, climate clubs, carbon pricing and border-adjustment measures should all be carefully considered as a way of kickstarting multilateral action. But a range of policies and initiatives could form part of the toolkit.

On all these issues, policy proposals should be driven by the UN Sustainable Development Goals and should be people-centred. Climate actions should also not become backdoor protectionism.

Third, after a disappointing COP25 on climate, the next major opportunity to align trade and climate governance will be the WTO’s 12th Ministerial Conference in June 2020. While some may say the WTO already has enough difficult issues to deal with, nothing would reinvigorate and modernise the WTO like stepping up efforts to meaningfully address climate change and support inclusive multilateralism.

The Ministerial presents a critical political opportunity to secure commitments to greater environmental sustainability from the WTO’s full membership. Looking forward, WTO Members should explore options like a Ministerial Statement on Environmental Sustainability and a plurilateral initiative of like-minded WTO members to catalyse progress on aligning trade and climate policy.

The private sector is demanding action on climate as well as practical reforms to make the global trading system work not only for people but also for the planet. Aligning the trade and climate policy regimes is an opportunity that cannot be missed.