Quick Win No. 5
Harness the power of multilateral and regional trade agreements to drive climate action
Climate change is a pressing global challenge that demands collective efforts and innovative solutions. Trade provides multiple pathways to address the profound impacts that climate change will have on people’s lives. In particular, multilateral and regional trade agreements can help protect and preserve the environment in three ways: by catalyzing cooperation among countries, accelerating access to environmental goods and services (EGS), and ensuring equity towards developing countries.
Regional FTAs offer immense opportunities to develop integrated climate resilience strategies among their members. These agreements can facilitate collaboration among neighboring countries, which often face similar climate-related challenges. They can also encourage the exchange of best practices and technical expertise in addressing climate risks and building resilience. Participating countries can jointly develop adaptation plans, establish early warning systems, and implement disaster risk reduction measures that are tailored to the region's unique characteristics. By pooling resources and coordinating efforts, regional FTAs enable countries to enhance their collective capacity to adapt to the impacts of climate change, ensuring the sustainability and resilience of their shared ecosystems and economies.
Multilateral trade agreements can also play a key role in helping countries reduce emissions by increasing the availability and affordability of environmental goods and services. They can facilitate the flow of low-carbon and environmentally friendly products by defining environmental goods and services and reducing or eliminating tariffs and non-tariff barriers on a global scale. By driving down the costs of renewable energy technologies, energy-efficient appliances, and pollution control equipment, multilateral rules can spur the adoption of clean technologies worldwide. This is the clearest path towards a low-carbon economy that supports sustainable development objectives. Expanding access to EGS benefits for both importing and exporting countries fosters innovation and collaboration towards achieving climate targets, and promotes a greener global economy.
As concerns about climate change grow, countries are rightfully implementing rules to prevent trade and other activities from negatively impacting the environment. Government regulations are a critical component in a comprehensive carbon reduction strategy, but it is vital that governments avoid trade restrictive measures that undermine the ultimate goal of reducing carbon emissions as much and as quickly as possible. Discrepancies between carbon standards and labels create high costs of compliance for exporters as they must adjust their production to comply with standards and conformity assessments of different markets. These unintended barriers to entry prevent small firms, especially those in developing countries, from accessing certain markets and achieving the necessary scale to be cost competitive. Multilateral disciplines can incentivize member countries to adopt or harmonize regulations to ensure a level playing field for businesses operating across borders. A WTO-compliant, environmentally effective and equitable approach to technical regulations is critical for the widespread adoption of low emission products and technologies.
Multilateral and regional trade agreements offer distinct opportunities for addressing climate change. Multilateral rules can accelerate access and ensure equity, while regional FTAs catalyze cooperation for integrated climate resilience strategies among neighboring countries. Importantly, both types of agreements facilitate sustainable trade in environmental goods and services, driving the transition to a low-carbon economy. By leveraging the power of these approaches, we can forge a path towards a low carbon future for all.
