Trade and the environment

Trade and Environmental Sustainability Structured Discussions (TESSD)

In November 2020, 50 WTO members announced their intention to organize structured discussions for interested WTO members to advance work on trade and environmental sustainability. The discussions would include promoting transparency and information sharing, identifying areas for future work within the WTO, supporting technical assistance and capacity building needs, particularly for least-developed countries, and working on “deliverables” of environmental sustainability in the various areas of the WTO. The idea was to complement the existing work of the Committee on Trade and Environment and other relevant WTO committees and bodies.

WTO Director-General Ngozi Okonjo-Iweala welcomed the discussions at the first meeting of co-sponsors on 5 March 2021, telling participants the initiative is in line with the WTO's founding principle of promoting sustainable development.

“I have said that to remain relevant, the WTO needs to deliver results,” she declared. “And looking to the future, we have to see how we can harness the power of trade to help us have a healthy environment.”

Since the launch of the initiative, known as the Trade and Environmental Sustainability Structured Discussions (TESSD), 74 members representing over 80% of world trade are now participating in the discussions. The group issued a Ministerial Statement in December 2021 (WT/MIN(21)/6/*) which, among other things, sets out future work for the initiative in areas such as trade and climate change, trade in environmental goods and services, circular economy, and sustainable supply chains.

Participants in the TESSD discussions set up informal working groups on four issues as part of a 2022 work plan agreed earlier in the year: environmental goods and services, trade‑related climate measures, circular economy — circularity, and subsidies. Inaugural meetings of the informal working groups took place on 17-18 May.

At MC12 in June 2022, Costa Rica, which coordinates the group with Canada, reported on the group's progress, including through the establishment of four informal working groups on environmental goods and services, trade-related climate measures, circular economy and circularity, and subsidies. Brazil, Tajikistan and United Arab Emirates were also welcomed as the most recent members of the initiative.

The initiative is open to all WTO members. Representatives from international organizations and civil society are also taking part in the discussions.

Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade (IDP)

The Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade (IDP) seeks to help address the rising environmental, health and economic cost of plastics pollution. The aim of the IDP is to promote trade as a tool in reining in plastics pollution and in promoting environmentally sustainable trade in plastics.

The IDP was launched in November 2020 by a group of WTO members. There are currently co-sponsors of this initiative, which is open to all WTO members. Co-coordinators of the initiative are Australia, Barbados, China, Ecuador, Fiji and Morocco. They rotate to chair IDP meetings.

Since its launch in November 2020, the IDP has focused discussions on six main topics: transparency and monitoring trade trends, promoting best practices, international cooperation, collective approaches, policy coherence, and capacity and technical assistance needs.

The IDP's work in 2021 was captured in a factual report (INF/TE/IDP/W/3) circulated on 4 October. Consolidating a wealth of information presented and discussed in the IDP, the report was welcomed by proponents and stakeholders as a useful information tool, which sets the parameters for future evidence-based discussions.

A Ministerial Statement (WT/MIN(21)/8/*) launched on 15 December 2021 spells out a roadmap for the IDP's work in support of global efforts to reduce plastics pollution and transition towards environmentally sustainable plastics trade. It lists the actions co-sponsors would take, including sharing experience on data collection regarding trade flows and supply chains, strengthening cooperation with other international regulatory processes and identifying environmentally sustainable trade policies and mechanisms. It also highlights the actions to strengthen technical assistance for vulnerable economies, including least-developed countries and small island developing states.

In March 2022, the IDP launched three workstreams to mark the first step towards implementing the Ministerial Statement. Each workstream will entail informal discussions and workshops to address specific topics outlined in the Ministerial Statement.

Co-sponsors identified a number of tangible actions to deepen the collaboration with other international processes in plastic pollution reduction, notably the launching of multilateral negotiations with the goal of reaching a binding agreement to end plastic pollution by the end of 2024, and the ongoing work at the World Customs Organization to amend the definition of plastic wastes in Harmonised System (HS) tariff codes in support of the Basel Convention Plastics Amendment.

At MC12 in June 2022, the coordinators of the dialogue on plastics pollution — Australia, Barbados, China, Ecuador, Fiji and Morocco — issued a Ministerial Statement to report on tangible steps they are next taking, noting as well the United Nations Environment Assembly resolution to launch negotiations with the goal of forging a global agreement by 2024 to end plastic pollution. Access further information on the Ministerial Statement and press briefing here.

Fossil Fuel Subsidies Reform

Forty-seven WTO members co-sponsor the Ministerial Statement on Fossil Fuel Subsidies issued in December 2021 (WT/MIN(21)/9/*), building on efforts from the 11th Ministerial Conference (MC11) in 2017, when 12 developed and developing WTO members launched a joint statement on fossil fuel subsidy reform. The MC11 statement affirmed the signatories' intention to phase out inefficient fossil fuel subsidies, consider the specific needs of developing countries, and advance discussions at the WTO.

Fossil fuel subsidies distort prices, affect the competitiveness of industries across product value chains, disadvantage clean and alternative energy technologies, and drain scarce public funding, according to the group coordinator New Zealand, speaking on behalf of the “Friends of FFSR” in meetings of the Committee on Trade and Environment. Reform of these subsidies could also free up fiscal resources for an effective COVID-19 recovery, New Zealand said.

The Ministerial Statement, New Zealand said, would enhance the sharing of information and experiences at the WTO, in order to develop a supportive international setting for addressing these subsidies and to assist domestic reform. The statement notes that subsidies have continued to steadily increase in the past decade and were estimated at approximately USD 500 billion in 2019.

The issue is also prominent in other international fora, with governments making pledges under the auspices of the G20, G7, APEC and Values 20 (V20), and in the context of the Paris Agreement on Climate Change and the Addis Ababa Action Agenda on Financing for Development.

At MC12 in June 2022, FFSR co-sponsors highlighted the recent adoption of their work plan to guide efforts for the reform of fossil fuel subsidies at the WTO. The plan sets out three meetings from 2022 to 2023 open to all WTO members and interested stakeholders to take stock of efforts, evidence and priorities on the matter, consider social aspects of the reforms and discuss next steps towards MC13. The group also welcomed Samoa and Paraguay as the newest co-sponsors.

COP26

The link between trade and environment was an important theme in the United Nations COP26 Climate Summit held from 31 October to 12 November 2021 in Glasgow, Scotland. In preparation for COP26, the WTO and International Chamber of Commerce held a special Virtual Trade Dialogues event that focused on the role of trade in supporting climate action. At the event, key stakeholders, including business representatives and non-governmental organisations, discussed how to mainstream trade into climate policy and how trade opening and sustainable investment can support net zero strategies for carbon dioxide emissions.

At COP26, WTO Director-General Ngozi Okonjo-Iweala stressed to world leaders and stakeholders that trade can and must make a contribution to a comprehensive climate action agenda. For the reduction of carbon emissions, in particular, she said a global approach to carbon pricing would prevent regulatory fragmentation, which would be detrimental to developing countries, small businesses and consumers. In the global shift towards low carbon economies, appropriate climate finance and technology development dissemination for climate mitigation and adaptation will be essential to ensuring a just transition, she added. Lowering trade barriers on environmentally friendly products, through trade facilitation and tariff reduction, can also be an important contribution of the WTO, she told COP26 participants.

Other developments

The WTO Secretariat has published six information briefs on trade, climate and related issues in support of efforts to harness trade policy as part of the solution for effective and just climate action. WTO members have discussed border carbon adjustment mechanisms and heard updates on a host of other trade-related climate policies in meetings of the Committee on Trade and Environment.

Further information

Sustainable development and the preservation of the environment are among the fundamental objectives of the WTO set out in the Preamble of the Marrakesh Agreement. A short guide to WTO rules and principles on trade and environment can be found here.

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