Evergreening of trade policy

• Developed and rich nations want WTO members to discuss, debate and agree on novel issues such as labour, e-commerce, NAMA and government procurement. But, at the same time, even while doing trade, India should not overlook the importance of environmental issues.
• Effective and optimal environmental policies and institutional frameworks are needed at the local, regional, national, and international levels. The effect of trade liberalisation on a country’s overall welfare and development depends on whether appropriate environmental policies are in place within the country in question.
• Trade governance can evolve and develop a true ally of multilateral efforts to guard and preserve the environment, including the Paris Agreement. Carbon pricing could assist as a mechanism to truncate the global carbon footprint of trade and to boost investment in green sectors.
• It is crucial that environment and environment-related goods and services should find place in the new policy as it would focus on sustainability issues. This step has the capacity to bring down the inequality between the economies.

WTO’s influence on development and protection of the environment comes in the form of fostering trade openness in goods and services to encourage economic development, and by providing steady and foreseeable conditions that boost the possibility of innovation. This encourages the optimized allocation of resources, economic growth and escalated income levels that in turn provide additional possibilities for shielding the environment. The vitality of trade’s contribution on sustainable development and environment-related issues has been recognized in such forums as the Rio Summit in 1992, Johannesburg Summit in 2002 and 2005 UN World Summit.

Trade growth can frequently have environmental implications. Trade may increase ecological externalities at the national, regional, or global level. While it is usually economically advantageous for nations to follow their comparative advantage through trade, environmental impacts such as augmented pollution or natural resource degradation may also occur as a result of trade. The effects of trade on the environment are heterogenous and varied.

Figure 1: Temperature change for India in degree Celsius in 2018

Source: FAO STATS, 2019

Agricultural cropping patterns transformed by the introduction of export-centric crops may encompass environmental harm or benefit. Secondary effects of trade may engender from the disruption of existing communities, increased migration, and impact on marginal lands. Pollution generated from manufacturing and industrial sector may be increased, reduced, or shifted in regional impact. International trade agreements make some provisions and scope for resource conservation and environmental protection, but these are usually limited exceptions to a general principle of free trade.

Within the World Trade Organization framework, members are allowed to take into account the environmental impacts of products, but not those related with production processes. This has led to several trade disputes over whether specific measures are justified on the grounds of protection of life and health, or are simply disguised protectionist practice. Policy responses to trade and environment issues can occur at the national, regional, or global level.

Majorly, European Union as a free trade area is an example that has set up institutions for transnational environmental standards enforcement. The North American Free Trade Agreement (NAFTA) was accompanied by a side agreement setting up an environmental monitoring authority, the Commission for Environmental Cooperation, but this body has little enforcement power

Effective and optimal environmental policies and institutional frameworks are needed at the local, regional, national, and international levels. The effect of trade liberalisation on a country’s overall welfare and development depends on whether appropriate environmental policies are in place within the country in question (e.g. correctly pricing exhaustible environmental resources). Stringent environmental policies are compatible with an open trade regime as they create markets for environmental goods that can subsequently be exported to countries that follow suit on environmental standards – the so-called first-mover advantage. This is especially true for complex technologies such as renewable energies.

Countries have initiated and implemented numerous environment-related efforts under the World Trade Organization (WTO) framework including negotiating tariff reductions in environmental goods and services, looking for more clarity on the relationship between prevailing WTO rules and explicit trade obligations in multilateral environmental agreements. Economies are also in process to construct cogent dictums on fisheries subsidies. In this way, the WTO is building a multilateral framework for international trade that also discourages any misguided temptation to engage in a “race to the bottom”.

The incorporation of environmental provisions in bilateral and regional trade agreements has also facilitated the harmonisation of environmental regulations between developed and developing countries. More advanced and developed economies can provide capital, resources and institutions for capacity building, and can inspire less-developed partners to strengthen environmental regulations. The OECD has brought out and addressed eclectic issues on trade and environment such as the drivers of environmental provisions in Regional Trade Agreements (RTAs), as well as the strictness of environmental policies as a driver for trade in goods in environmental goods and services. International organizations like OECD and WTO are also currently developing a set of norms and policy indicators on trade and environment to help monitor progress towards more policy coherence, and to identify policy priorities at the intersection of trade and environment.

Developed and rich nations want WTO members to discuss, debate and agree on novel issues such as labour, e-commerce, NAMA and government procurement. But, at the same time, even while doing trade, India should not overlook the importance of bringing in environmental issues. Indian policymakers are concerned about it, and will like to have an agreement on environment in WTO. It is crucial that environment and environment-related good and services should find place in the new policy as it would focus on sustainability issues. This step has the capacity to bring down and abridge the inequality between the economies.

Trade governance can evolve and develop a true alliance of multilateral efforts to guard and preserve the environment, including the Paris Agreement. Carbon pricing could assist as a mechanism to truncate the global carbon footprint of trade and to boost investment in green sectors. The global trading mechanism must also actively contribute to eliminating environmentally harmful practises.

Most of the significant initiatives are already ongoing: For example, China is already eliminating plastic waste imports. Similarly, Norway is tackling trade in waste. Under a new proposal, plastic would be added to the list of wastes subject to controls under the Basel Convention which is effectively treating it as hazardous, meanwhile, halting one of the outlets for our unsustainable use of the material and contributing to a more circular economy.