Aerial view of oil tanker ship at the port, Oil terminal is industrial facility for storage of oil and petrochemical products ready for transport to further storage facilities.
Commentary

Delivering for the Environment at MC12

Prospects to enhance trade cooperation on environmental challenges and the Sustainable Development Goals

Carolyn Deere Birkbeck from the Forum on Trade, Environment and the SDGs analyzes some of the top opportunities for trade policy-makers at the World Trade Organization’s upcoming 12th Ministerial Conference to address environmental crises in a way that supports sustainable development.
By Carolyn Deere Birkbeck on November 24, 2021

In the lead-up to the World Trade Organization’s (WTO’s) 12th Ministerial Conference (MC12), a broad array of WTO members are working to foster enhanced multilateral cooperation on environmental sustainability. At the heart of these efforts is a recognition of the need to ensure that trade and trade policies support action to address global environmental challenges and advance implementation of the United Nations Sustainable Development Goals, which emphasize the economic, social, and environmental dimensions of sustainable development. At a time when addressing triple environmental crises—climate change, nature loss, and pollution—is more urgent than ever, the prospects of important steps in the right direction at MC12 are high.

The top environmental priority for Ministers is to conclude a balanced and meaningful deal on fishery subsidies. The long-standing negotiations aim to tackle subsidies that support illegal, unreported, and unregulated fishing or encourage overcapacity and overfishing as these forms of support directly contribute to the depletion of the world’s fish stocks and harm marine ecosystems. Creating new, binding multilateral trade rules on any topic is incredibly difficult, and securing a credible environmental outcome at the WTO on fisheries, where economic and commercial stakes are high and tightly linked to sustainability, would be a significant achievement.

The top environmental priority for the ministerial is concluding a balanced and meaningful deal on fishery subsidies reform.

Another environmental opportunity is for members to speak up at MC12 on the importance of stronger cooperation on the nexus of trade, environment, and sustainable development at the WTO. Ideally, members would include an agenda item on the environment in the official ministerial program. Further, any official ministerial outcome document—or ministerial declaration from the WTO membership—that emerges from MC12 should include a clear commitment to inclusive trade-related cooperation on issues of climate, the environment, and sustainable development, including by mainstreaming sustainability considerations across the work of the WTO committees. In the wake of the United Nations Climate Change Conference (COP 26), members should also specifically recognize the relevance of greater cooperation on trade to advance the goals and principles of COP 26 and the Paris Agreement. Such cooperation should ensure among other things that climate policies do not unfairly restrict trade and that developing countries receive enhanced trade-related support for climate-friendly development and climate adaptation efforts.

Trade and Environmental Sustainability Structured Discussions: A key opening for the environment at the WTO

There are also new openings for cooperation on environmental goals at the WTO and an area where we can expect members to make progress at MC12. The first is the unprecedented process of Trade and Environmental Sustainability Structured Discussions (TESSD), which was launched in November 2020 by 53 WTO members.

Over the past year, TESSD has provided a much-needed space for members to exchange views on a diverse set of issues, share proposals, and galvanize attention on the nexus of trade, environment, and sustainable development at the WTO. Meetings are open to all members and, in a first for a WTO process, they have provided opportunities for participation by some external non-governmental stakeholders, as well as an expanded list of international organizations.

More than 60 WTO members have confirmed their co-sponsorship of a proposed TESSD ministerial statement which emphasizes the importance of cooperation on environmental sustainability in the multilateral trade arena and set out a roadmap for future work.

Co-convened by Canada and Costa Rica, co-sponsors include major trade powers such as the European Union, China, the United States, and Japan, as well as the United Kingdom and Australia, and developing countries ranging from Colombia and Chile to Fiji, Senegal, and Chad. They also include several economies in transition, such as Kazakhstan, Moldova, and Albania. Together, they are encouraging as many WTO members as possible to join the TESSD statement to signal the importance of stronger cooperation across the organization’s membership and to create an inclusive way forward. Critically, the co-sponsors have underlined that joining the statement does not bind any country to negotiations on new multilateral rules or market access commitments. The primary focus is to spur intensified dialogue that will be vital to solving problems, avert trade tensions, and inform any future initiatives among like-minded members. Co-sponsors have also emphasized that the TESSD process is intended to complement the multilateral discussions in the WTO’s regular processes and provide an informal space for members to incubate inclusive cooperation and innovative approaches, which could then be taken up in relevant bodies, such as the Committee on Trade and Environment.

The TESSD ministerial statement offers governments and stakeholders a chance to make headway on the three intersecting global environmental crises.

On climate, it provides opportunities to pursue inclusive dialogue on the intersection of trade and climate policies and to bolster multilateral cooperation on how trade and trade policies can support the achievement of the Paris Agreement goals in ways that address the views and concerns of developing countries.

On nature loss, TESSD offers a chance to boost understanding of the impacts of trade on biodiversity and ecosystems, and to identify trade-related opportunities and best practices to foster the conservation, sustainable use, and restoration of nature and natural resources, including through more sustainable agriculture and commodities trade.

On pollution, it enables members to discuss concrete ways to cooperate on trade and trade policies that can support resource-efficient, nature-positive, and less-polluting circular economies.

Ministerial Statement on Plastic Pollution

A group of more than 65 WTO members is also poised to issue a ministerial statement on plastic pollution at MC12. The Informal Dialogue on Plastic Pollution and Environmentally Sustainable Plastics Trade (IDP), launched in November 2020 by 16 WTO members, was initially galvanized by a group of developing countries led by China and Fiji. In 2021, IDP discussions focused on six topics: transparency, international cooperation, information sharing, policy coherence, voluntary action, and technical assistance and capacity building. Shepherded by six co-convenors (Australia, Barbados, China, Ecuador, Fiji, and Morocco), these meetings are open to all WTO members as well as some stakeholder groups.

The ministerial statement identifies concrete opportunities for cooperation on trade and trade policy that would help reduce plastic pollution and support sustainable development, while complementing and promoting coherence with wider international efforts, including at the UN Environment Assembly, where more than 100 countries are calling for a new global agreement on plastic pollution.

Ministerial Statement on Fossil Fuel Subsidy Reform

A group of 43 WTO members will issue a ministerial statement on fossil fuel subsidy reform at MC12. The statement will commit co-sponsoring members to improved information sharing to advance discussion “aimed at achieving ambitious and effective disciplines on inefficient fossil fuel subsidies … including through enhanced WTO transparency and reporting” and elaborating concrete options to advance this issue before the 13th Ministerial Conference. A significant development is that the European Union (and its 27 members), the UK, Japan and the US joined as cosponsors together with a range of developing countries, including small island developing states (SIDS). In addition to calling for the rationalization and phasing out of fossil fuel subsidies along a clear timeline, the statement establishes a process for dialogue, transparency, learning, and experience sharing. It also recognizes that fossil fuel subsidy reform “needs to take fully into account the specific needs and conditions of developing countries and minimize the possible adverse impacts on their development in a manner that protects the poor and the affected communities.”

A cross-cutting issue that arises across all of these member-led initiatives is the need to support financing, capacity building, and technical assistance for developing countries on the trade–environment–sustainable development nexus in ways that support their economic diversification goals and trade priorities.

A cross-cutting issue that arises across all of these member-led initiatives is the need to support financing, capacity building, and technical assistance for developing countries on the trade–environment–sustainable development nexus in ways that support their economic diversification goals and trade priorities. Calls for such enhanced Aid for Trade could be achieved both by mainstreaming environmental goals and providing additional resources for environment-related Aid for Trade activities. Such support will be vital to enable the most climate-vulnerable countries to adapt their production and trade to the changing climate, foster trade-related resilience in the face of climate shocks, transform agricultural production practices to support nature and climate goals, and help businesses in developing countries meet environmental standards and adopt circular economy approaches to more sustainable production and consumption.

Approaching Environmental Sustainability Through a Sustainable Development Lens

Looking ahead, the top challenge in taking environmental efforts forward in the multilateral context will be to combine environmental ambition with an approach that engages developing countries as partners, reflects their environment-related trade priorities, and addresses their sustainable development interests. The importance of an approach that engages developing countries must not be underestimated. This engagement is vital if we are to build a global green economy that doesn’t leave the poorest behind and to avoid a two-tier global economy, where green trade occurs among only a subset of countries and we neglect the essential task of incentivizing and supporting sustainable production and consumption patterns in all countries.

Importantly, the new member-led initiatives at the WTO signal that while the rule-making and negotiating functions remain central to the global trade body, governments also recognize the need for enhanced, transparent, and inclusive policy dialogue and problem solving on sectoral issues and specific trade-related challenges. Given the well-documented challenges of multilateral consensus at the WTO, governments are exploring new ways to work within multilateral frameworks and with the spirit of multilateralism and to redefine what progress and successful outcomes can look like. Here, best practices, voluntary action, pledges, and guidelines are outcomes that can both sustain the relevance of the multilateral trading system and support the policy action at the national level needed to support trade that underpins environmental and wider sustainable goals.

The top challenge in taking environmental efforts forward in the multilateral context will be to combine environmental ambition with an approach that engages developing countries as partners, reflects their environment-related trade priorities, and addresses their sustainable development interests.

Beyond MC12, making progress on an environmental agenda that reflects sustainable development concerns will require stronger leadership, engagement, and advocacy on these topics from business, civil society, and research communities in developing and developed countries as well as economies in transition. Meaningful, inclusive dialogue and action at the WTO will also require deeper efforts to build policy coherence among environment, development, and trade policy-making at home, with environmental ministries having a key role to play in bringing environmental expertise to bear and ensuring strong regulatory environments and institutions for the implementation of national, regional, and international environmental commitments. At the domestic level, countries face complex politics and diverse interests as they work to transform their economies toward greater sustainability and tackle the costs of transition.

Commentary details

Topic
Trade