Priorities for the climate-trade agenda: how a trade ministers' coalition for cooperation on climate action could help

Abstract

This paper argues that governments should commit to enhanced international dialogue, coordination and action on trade and climate intersections through: 1. Ministerial attention to trade, climate and environmental sustainability on the official agenda of the 12th WTO Ministerial Conference (MC12) in late 2021 as well as through a complementary Ministerial Statement, co-sponsored by a majority of WTO Members, that recognises the need for the multilateral trading system to enable and support climate mitigation and adaptation efforts and the importance of multilateral cooperation on the interface of climate, trade and sustainable development goals; and 2. The creation of a trade ministers’ coalition for cooperation on climate action to serve as focal point for the top-level dialogue needed to develop trade policy frameworks that support climate mitigation and adaptation, to solve tough and complex issues around competitiveness, fairness and transparency, and to advance coordination on trade and climate policy intersections. The coalition could help forge a shared vision of the highest priorities at the interface of climate and trade, how these should be pursued in policy terms, and how best to cooperate and connect the dots between different international processes. The paper also identifies six policy priorities at the interface of climate and trade that could be advanced in the final months of 2021: 1. Commitments to enhanced transparency, consultation and coordination on climate policies and regulations that impact trade, and on trade policies that impact the climate and decarbonization efforts, with special attention to addressing the needs of developing countries and unintended trade consequences; 2. Action to promote trade in climate-friendly goods and services, including at the World Trade Organization (WTO), with a focus on trade and supply chains that support climate mitigation and adaptation as top priorities; 3. Launch of talks on fossil fuel subsidy reform at the WTO that combine a focus on improved transparency, a just transition and a timeline for cooperation on concrete reform efforts; 4. Commitments to increase green aid for trade and finance to support trade-related climate mitigation and adaptation, and to promote climate-friendly economic diversification, production and trade in developing countries; 5. Adoption of a 2025 deadline for net zero official trade finance; and 6. Enhanced ambition and cooperation to reduce transportation emissions associated with international trade and decarbonize the transport sector.