Climate Change

Climate change poses an urgent threat to the planet. As emphasised by International Monetary Fund’s Managing Director Christine Lagarde, “Climate change is the greatest economic challenge of the twenty-first century.” To tackle the problem, it is crucial that policies and measures to mitigate the causes of climate change and to address its impacts are effective. In today’s globalised economy, the roles of trade and investment will enable or frustrate the effectiveness of such measures.

In the post-Paris world, we will be moving into a scenario where all of the world’s nations will design and implement climate policies, reflecting their respective priorities and capabilities, many for the first time and with little guidance from the UN-system. This move to a universal response to climate change, a crucial development in order to meet the urgent challenge,  will impact relative prices, supply, demand and ultimately trade flows, and will inevitably test the limits of current trade rules.

What was for some time a purely academic debate, the link between trade and climate change has now become a political reality, increasingly relevant to the international trading system. Recent regional trade agreements explicitly refer to climate change and, in some cases, include specific provisions on the topic, indicating that there is a positive role for trade to play in the area of climate action. Climate-related disputes are also becoming increasingly frequent at the WTO; but with current trade rules having been established long before climate change was an issue on the global agenda, the WTO’s dispute settlement body has a somewhat outdated toolbox with which to work.

Against this background, the expert group has examined the challenges and opportunities to support climate action (mitigation and adaptation) through trade; identified constraints posed by the current global trading system to provide a supportive framework for climate action and identified possibilities for improvement; explored the role of trade in  regimes outside the global trading system in support of climate action; and proposed options where trade positively contributes to both adaptation and mitigation.