The WTO recommends reduction of tariffs on environmental goods

The World Trade Organization (OMC) recommended a reduction in tariffs on environmental goods at the global level.

According to estimates from the OMCreducing tariffs and non-tariff measures on energy-related environmental goods could increase total exports of these products by 5% by 2030 while leading to a net reduction in carbon emissions.

Along with other public policies, trade has already played an important role in the global climate response,” WTO Director-General Ngozi Okonjo-Iweala said in the WTO’s annual report on world trade.

The report focuses this year on “climate change and international trade” and was published this Monday, just after the 2022 United Nations Climate Change Conference (COP27) began on Sunday in Egypt.

For example, Okonjo-Iweala argued that the cost of solar panels it has plummeted over the past three decades, and about 40% of the cost decline has been attributed to economies of scale made possible in part by international trade and value chains.

The capacity of solar panels traded across borders in 2017 reached almost 80 GW, equivalent to more than 9% of global electricity generation.

Okonjo-Iweala stressed that further opening of trade in environmental goods and services could do more.

She also referred to employment benefits: the International Energy Agency estimates that the switch to clean energy could generate 14 million new jobs in clean energy sectors and 16 million jobs in related sectors. global level by 2030.

Beyond amplifying the impact of climate policy and financegreater international trade cooperation is key to managing and minimizing potential trade frictions associated with climate action.

On this, Okonjo-Iweala gave as an example that there are currently about 70 carbon pricing systems around the world.

Without common approaches to pricing and benchmarking, there is a significant risk that unilateral measures to prevent carbon leakage and loss of competitiveness could fuel trade tensions and create high administrative costs for businesses and governments.

Uncoordinated climate actions could also hamper decarbonization efforts by increasing uncertainty and discouraging much-needed investment.

“The current proliferation of decarbonisation initiatives and regulations – there are more than 20 different decarbonisation regulations in the steel sector alone – creates confusion for producers and could lead to trade frictions,” Okonjo-Iweala said.

In keeping with its long-standing role in promoting transparency regarding policy measures affecting trade and fostering cooperation in the direction of comparability, compatibility and harmonization, the WTO could play a similar for carbon pricing and standards.

The OMC is working with other multilateral agencies – the International Monetary Fund, the Organization for Economic Co-operation and Development, and the World Bank – to bring a business perspective to discussions and research on carbon mitigation approaches.

roberto.morales@eleconomista.mx