The 2022 edition of the WTO’s World Trade Report presents new analysis and recommendations on how international trade and greater cooperation can amplify global efforts to address climate change and put the planet on a sustainable trajectory.
The report conveys four main messages:
#1 Climate change is a major threat to future growth and prosperity: This is due to potential productivity losses, production shortages, damaged transport infrastructure and supply chain disruptions.
Furthermore, without significant reductions in global greenhouse gas (GHG) emissions, many countries are likely to find their comparative advantages changing, with agriculture, tourism and some manufacturing sectors particularly vulnerable to climate impacts.
#2 Trade is a force multiplier for countries’ adaptation efforts: These efforts aim to address climate disruptions, reduce costs of technologies and ensure critical goods and services.
In the longer-run, open international markets would help countries achieve necessary economic adjustment and resource reallocation. This is particularly relevant for the most vulnerable economies — least-developed countries, small-island developing states and landlocked developing countries.
#3 Trade can reduce the cost of mitigating climate change: This can be achieved by supporting the reduction or prevention of GHG emissions, and speed up the transition to a low-carbon economy and the creation of green jobs.
WTO simulations presented in the report suggest that eliminating tariffs and reducing non-tariff measures on a subset of energy-related environmental goods could boost exports by 5% by 2030, while the resulting increases in energy efficiency and renewable uptake would reduce global emissions by 0.6 per cent.
This report is being launched at the same time as COP27. What I hope to see emerge there and elsewhere is a trade and investment facilitation pathway in support of a just transition to a low-carbon economy,
Director-General Ngozi Okonjo-Iweala, who is participating in the climate summit, said.
Finally, the report emphasizes that international cooperation on trade-related aspects of climate policy is vital for making climate actions more effective, and the low-carbon transition more just, minimizing trade frictions and investor uncertainty.
The report shows that, without global cooperation on ambitious climate policies, the world will not achieve the Paris Agreement’s goal of limiting the global temperature rise to well below 2 degrees Celsius.
