15 Dec 2015 News Green economy

Executive Perspective: Trading Up to Sustainable Development


Geneva, 15 December 2015 - Two decades ago, the birth of the World Trade Organization rang alarm bells in the environmental community. Would such a comprehensive and ambitious trade agreement steamroll existing environment standards and regulations? Would environmental conventions that restrict and ban trade – as in the case of ozone-depleting substances and endangered species – be ignored in favour of opening markets? Would these new binding and enforceable global trade rules seal the fate of progress on environmental protection?

The outward purpose of the new trading system, to lower and eliminate barriers to trade, appeared incompatible with environmentally motivated restrictions on the movement of goods.

The 10th Ministerial Conference of the WTO will open shortly in Nairobi, Kenya, home of the UN Environment Programme. In 2015, the dread from 20 years ago now seems largely unfounded. Not only has the WTO tended to respect environmental standards and regulations where they are not egregiously protectionist, it has clearly established that international environmental agreements have full standing in the context of trade rules. These agreements have even be used to help interpret WTO rules in ways that benefit the environment. Further, the WTO has showed a clear preference for allowing the environmental agreements themselves to deal directly with the issues that arise rather than arbitrating them in the WTO. This perhaps shouldn’t be overly surprising: thee same countries that adopted international environmental accords tend to form the WTO’s membership.

As UNEP’s work with IISD and numerous other partners has shown, measures to liberalize trade and safeguard the environment increasingly go hand-in-hand. Policies geared toward sustainable development, such as greening agricultural practices or eco-innovation, can lead to new trade opportunities. Trade itself, under proper conditions, can be a driver of resource efficiency and contribute to mitigating and adapting to climate change

Does this entente between trade and environment mean we can look forward to a complete harmonization of the two down the road?

The answer depends on how you see the challenges of the future.  On one hand, the draft Ministerial statement for the 10th meeting makes no mention of the environment or climate change, and only one passing reference to sustainable development. This could suggest that the issues may be so integrated into market thinking that they are effectively behind us. On the other hand, the question remains as to whether the trading system is contributing adequately to solving the broader challenges of sustainable development, improving human health and well-being, and addressing inequality and injustice.

The recent climate conference in Paris underlined not only how quickly we are approaching the dire future of a disrupted climate, but also that present levels of commitment are inadequate to shield us entirely from those disastrous climate scenarios. Pessimists can easily imagine a not-too-distant future when avoiding catastrophic climate change might become the overwhelming priority and all policy is reviewed to determine whether it helps or hinders action to avoid this outcome.

How well equipped is the WTO – and the other trade agreements that make up the multilateral trading system – to support resolute action to save the climate? Are the present rules and practices flexible enough to accommodate the action that may be needed? Or will it be necessary to revisit current rules, eliminating some and developing others?

Many in the trade world will argue that governments are free to pursue their environmental objectives provided they do so in a way that does not discriminate against trading partners. Others, however, feel that the scale of our environmental challenges requires exceptional measures – like border carbon adjustment – and that the imperative of avoiding environmental disaster may have to trump even well-established trade practices.

This twentieth anniversary year is, for the WTO, an excellent opportunity to begin examining whether it is genuinely “fit for purpose” in light of the significant challenges we are facing. After all, the preamble to the act establishing the WTO calls for trade relations to be conducted in such a way as to allow “for the optimal use of the world’s resources in accordance with the objective of sustainable development.” For this to happen, poorer countries need increased capacity to engage and shape the design of trade policies that can help them achieve national sustainable development priorities and the internationally agreed-upon Sustainable Development Goals.

UNEP is working to do just this with its newly established “Environment and Trade Hub”. The Hub’s capacity building services include tailored technical training to support international, regional and national design and implementation of sustainable trade and investment policies.

The current round of WTO Ministerial negotiations are unlikely to go much beyond tweaking rules at the margins. However, we would do well to step back and look at the larger picture. Let us take this Ministerial meeting as an opportunity to examine closely how the international, regional and national trading systems can evolve beyond promoting simple economic growth to favouring growth that is inclusive, equitable and environmentally sustainable.


Achim Steiner is the former Executive Director of the UN Environment Programme

Scott Vaughn is President and CEO of the International Institute for Sustainable Development

Article taken from Thompson Reuters