The World Trade Organization’s (WTO’s) Sixth Trade and Environment Week took place from June 30th to July 4th, amid trade tensions and uncertainty about the WTO’s future, as the United States continues to violate WTO agreements and withhold financial contributions for 2024 and 2025. Despite these pressures, WTO Members convened stakeholders to discuss progress and priorities in implementing trade policies that support climate and environmental goals. This annual event reflects growing international interest in aligning trade and climate policies, providing a forum for deeper discussion and exchanging ideas.
Despite trade tensions, there remains room for optimism regarding trade’s role in the fight against climate change, as Members of the WTO continue to advance trade-related climate measures that will reduce emissions and pollution while expanding economic opportunities available to their citizens. Brazil, as host to COP 30, has worked to frame climate and trade as an enabler and accelerator for climate action, illustrating the growing significance of this trend.
Throughout the week, participants called for the Members of the WTO to ensure predictable and stable rules for trade, including by ensuring that greenhouse gas emissions accounting requirements and methods are transparent and compatible across jurisdictions. Preceding the week of events, Australia, Japan, Korea, and the United Kingdom submitted non-binding guidance for establishing methodologies for calculating the emissions embodied in traded goods, complementing discussions in the Inclusive Forum on Carbon Mitigation Approaches (IFCMA) and G7 Climate Club.
Ensuring that these methodologies are compatible across borders prevents businesses from having to comply with multiple accounting frameworks, which would raise costs and inefficiencies. As the representative from the Adani Group, an Indian conglomerate, stated, businesses would rather have to meet one strict but internationally recognized standard than be required to comply with a global “spaghetti bowl” of regulations. Negotiating one such harmonized standard remains unlikely in the immediate future. But this statement reinforces the need for interoperable methodologies to account for the emissions embodied in traded goods, echoing C2ES’s call for G7 cooperation on this issue.
The United States must remain engaged in carbon accounting methodology negotiations at the WTO, IFCMA, and G7 Climate Club, not only to advance effective climate action but also to preserve the interests of U.S. industry. Taking a leading role in these discussions ensures that the resulting standards reflect the interests of U.S. industry, among other diverse perspectives. Doing so will require the United States to better understand the emissions intensity of its own industry by developing internationally interoperable emissions monitoring, reporting, and verification schemes down to the product level.
Even as countries work to reduce emissions, the increasingly visible effects of a changing climate illustrate the need to not only mitigate but also adapt to climate change. Adaptation will be crucial for the health and economic welfare of vulnerable communities around the world. Participants at Trade and Environment Week therefore drew attention to the role trade can play in facilitating climate change adaptation and resilience, whether by disseminating key technologies and services, or by providing developing states with new economic opportunities in low-carbon value chains, reducing emissions while making them less vulnerable to an altered climate.
Climate-aligned trade policies will extend to cross-border trade in services, either through foreign direct investment or through activities like the installation, maintenance, and operation of renewable energy facilities. The international proliferation of climate-aligned trade policies creates an opportunity for the United States to capitalize on its claimed carbon advantage and advanced manufacturing capabilities by leading the way in developing the markets and value chains associated with climate-aligned goods and services. This could take the form of collaborating with key trading partners to promote the offtake of low-carbon industrial and consumer products or by developing and exporting advanced technologies.
Discussions at this year’s convening demonstrate that countries continue to engage actively in climate and trade policy development. As part of its mission to accelerate a resilient, just, and thriving net-zero economy, C2ES supports the advancement of trade policies that create economic opportunities while reducing the emissions embodied in traded goods. C2ES will continue its advocacy for such policies in the United States and around the world.