International trade and stronger cooperation can boost global action to tackle climate change and put the planet on a sustainable path, says the World Trade Organization (WTO).
In its World Trade Report – Edition 2022 – released earlier this week on the sidelines of the 27th United Nations Conference on Climate Change (COP27) held in Sharm el-Sheikh (Egypt), the international body considers that global trade should be. Foundations of Climate Action.
The WTO’s flagship publication, which examines various aspects of the relationship between international trade and climate change, points out that the WTO “argues that trade is a positive force for climate, low carbon, resilience and part of the solution. Just change,” said WTO Director-General Ngozi Okonjo-Iweala.
“It examines how international trade may exacerbate climate change, how the effects of climate change may alter trade patterns and trade relationships, and how trade can act as a catalyst for the global response to the climate crisis,” the international organization explains.
While considering trade as a key lever for transforming the global economy and setting the planet on a sustainable path, the World Trade Report is structured around four key messages.
The first message is a reminder that climate change poses a major threat to future growth and prosperity due to potential productivity losses, production shortages, damaged transport infrastructure and supply chain disruptions.
It further argues, “Without significant reductions in global greenhouse gas (GHG) emissions, many countries could see their comparative advantages reversed, with agriculture, tourism and some manufacturing sectors particularly vulnerable to climate impacts.”
The second message is that trade is a force for countries’ adaptation efforts to climate disruption, technologies and reducing the costs of essential goods and services.
“In the long run, open international markets will help countries make the necessary economic adjustments and reallocate resources,” the WTO asserts, especially for the most vulnerable economies – least developed countries, small island developing countries and landlocked developing countries.
A third message argues that trade can reduce the cost of climate change mitigation – by supporting the reduction or prevention of GHG emissions – and accelerate the transition to a low-carbon economy and the creation of green jobs.
In fact, as the organization explains in a press release, “WTO simulations presented in the report suggest that eliminating tariffs and reducing non-tariff measures on a subset of environmental goods could increase exports by 5% by 2030. The resulting increase in energy efficiency and adoption of renewable energy would reduce global emissions by 0.6%.
A fourth message is also noteworthy, arguing that international cooperation on the commercial aspects of climate policy is necessary to make climate action more effective and justify a low-carbon transition by reducing trade frictions and investor uncertainty.
Without global cooperation on ambitious climate policies, the report’s authors believe the world will not reach the Paris Agreement goal of limiting global temperature rise to less than 2 degrees Celsius.
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