The WTO and Green Trade: Global solutions to solve a global problem

Introduction

On 15 December 2021, World Trade Organisation (WTO) representatives met to deliver ministerial statements on three environmental initiatives. These vowed to focus on environmental issues and work together and examine how trade can play a positive role in addressing each of their environmental concerns; and how these issues could be addressed effectively within the WTO framework.

These initiatives are likely to target trading practices in established industries and supply chains, such as those involving plastics, fossil fuels and other less sustainable inputs. They signal that the WTO mean business on tackling climate change. Those who operate in the fossil fuel sector, or who have a significant presence of plastics in their supply chain should monitor these developments carefully and consider engaging with relevant stakeholders to ensure they can help make a positive impact in collaboration with key decision-makers.

The Initiatives

Each initiative has specific WTO Members (or ‘co-sponsors’) with nearly half of all WTO Members now taking part in one or more of the initiatives. All three initiatives have the common aim to collaborate and support the Sustainable Development Goals, which are a set of targets to be achieved by 2030 in areas such as poverty reduction, health, education and the environment. All three initiatives have committed to advancing their respective workstreams with concrete proposals ahead of the next WTO Ministerial Conference, likely to take place in 2022.

The three new initiatives are:

1) The Trade and Environmental Sustainability Structured Discussions (TESSD)

• This initiative was launched in November 2020 and now consists of 71 endorsing WTO Members, which represents over 80% of the world’s trade. It aims to discuss how trade-related measures and policies can best contribute to achieving climate and environmental goals.
• The Ministerial Statement issued by the TESSD on 14 December 2021 sets out future work for the initiative including:
• identifying best practices to promote trade in environmental goods and services; achieve a more resource-efficient circular economy; and transition to more sustainable supply chains;
• identifying challenges and opportunities for sustainable trade, with a focus on developing and least developed WTO Members, and encouraging collaboration among participating WTO Members to strengthen capacity building on trade and sustainability; and
• supporting continued discussions on the trade and environmental effects of relevant subsidies and the role of the WTO in addressing these.

2) The Informal Dialogue on Plastics Pollution and Sustainable Plastics Trade (IDP)

• This initiative was also launched in November 2020 and now consists of 67 endorsing WTO Members. It aims to promote sustainable trade in plastics given the increasing environmental, health and economic cost of plastics pollution. They note that trade in plastics accounts for as much as 5% of global trade.
• The Ministerial Statement issued by the IDP on 10 December 2021 sets out future work for the initiative including:
• identifying concrete actions that WTO Members could take individually or collectively to support global efforts to reduce plastics pollution, and transition to a more sustainable plastics trading model; and
• strengthening regulatory obligations and cooperation on issues such as standards, design and labelling for plastics; and improving the data collection regarding trade flows and supply chains.

3) Fossil Fuel Subsidy Reform (FFSR)

• This initiative consists of 45 endorsing WTO Members, with the aim of advancing transparency in fossil fuel subsidies within the WTO, and reforming the use of fossil fuel subsidies. The FFSR notes that fossil fuel subsidies have steadily increased in the past decade and were estimated to be worth approximately USD500 billion in 2019.
• The Ministerial Statement issued by the FFSR on 14 December 2021 sets out future work for the initiative including:
  • rationalising and phasing out the use of fossil fuel subsidies. The FFSR determine that such subsidies encourage wasteful consumption and reduce the level of investment in renewable energy. They suggest that the removal of such subsidies would ‘unlock’ a significant amount of financial resource, globally, to nurture and develop green industries and sectors; and
  • sharing information and experiences to increase the transparency between WTO Members on fossil fuel subsidies to facilitate a better evaluation of the trade, economic, and environmental effects of fossil fuel subsidy programmes.

What do these initiatives mean for your business?

Whilst pursuing sustainable development and preservation of the environment have been fundamental goals of the WTO since it was established, these new initiatives are a progressive move for a collective and coordinated response. It sends a strong political signal from WTO Members as to their desire to pursue a proactive environmental agenda for trade, on a global, multilateral basis. Many of the WTO Members/co-sponsors of the initiatives share a commitment to progress these priorities in conjunction with wider international and domestic environmental initiatives, to ensure there is a coordinated policy direction.

The significance of these initiatives is that they provide dedicated forums where businesses can initiate a dialogue with international stakeholders and decision-makers. They allow interested parties to come together to try and find creative legal, regulatory and public policy solutions to the global environmental challenges we face. Testament to the WTO’s commitment to engaging meaningfully with external stakeholders, is the fact that all WTO Members, and representatives from civil society groups, business and other international organisations have been invited to take part in the initiatives.

Businesses should consider how they can effectively engage with the WTO Members, international governments, and the initiatives (and their co-sponsors) themselves to:

1. inform and educate them on key issues of importance; and
2. support them in developing innovative and pragmatic global solutions to this global issue.

How can DLA Piper help?

DLA Piper is committed to making businesses better by helping clients and communities transition to and thrive in a more sustainable future. We understand the challenges and needs of each sector and deliver seamless global solutions that help our clients around the world to confront the complex strategic, legal, financial and operational sustainability opportunities.

Please do reach out to the authors of this article if we can assist you further.