COP28 Trade Day: Bold Action for People and Planet is Urgently Needed
Trade deals drive up emissions and block action on climate change - it’s high time world leaders did something about it. As members meet for COP28 Trade Day, we are calling for them to ensure trade supports climate action for the many, not the few, and propose a few policy options to do just that.
Today and for the first time ever, trade will be on the agenda at a COP. This could be a welcome move, but the devil lies in the details: too often, the focus is too narrowly on ‘trade opportunities’ of climate change. Many of these mean market opportunities for the ‘green’ goods and services, like carbon capture and storage or hydrogen production, that richer countries want to sell to the rest of the world. The danger is that work on trade and climate change ignores the needs and priorities of the Global South.
The examples of how trade can undermine climate action are myriad. Increased production driven by international trade is responsible for significant emissions: the fashion industry alone emits 2.1 billion tonnes of CO2 every year. In addition, rules incorporated into trade and investment agreements can put the brakes on climate action. For example, Investor-to-State Dispute Settlement (ISDS) mechanisms mean that UK oil companies like Rockhopper can sue a country for hundreds of millions if it tries to limit the extraction of oil and gas, and intellectual property rules can curtail farmers’ right to save, use, exchange and sell seeds critical to ensuring crops resilient to a changing climate.
Recently, there have been some moves to try to introduce measures to address these issues. However, most proposals involve unilateral trade and climate action by richer countries, and there is mounting concern that they could be detrimental to the Global South. For example, multiple studies find that proposed Carbon Border Adjustment Mechanisms (CBAM – a tax imposed at the border on relatively higher emitting products) could cost the African continent up to £25 billion per year. The EU has already launched a CBAM, and the UK looks likely to do the same, but this could be the first of many changes aimed at aligning trade with climate goals. If these proposals are not developed with Global South participation, important principles like the Sustainable Development Goal (SDG) commitment to leave no one behind could easily become undermined.
Countries in the Global South have had various alternative proposals on the table for decades to support their efforts against climate change, but these are too often ignored by richer countries. For example, urgent change is needed to the World Trade Organisation’s rules on agriculture to ensure equal benefits. Many of the organisation’s members have also called for a waiver to allow them to stockpile food in the event of shortages or global price volatility but richer countries have blocked the idea. It is in many ways a continuation of historic colonial relationships whereby ideas from former imperial powers take precedence over those from the Global South.
COP28’s Trade Day will be truly transformative if countries commit to ensuring increased trade and trade agreements cease driving emissions and blocking climate action. As Antonio Guterres has been at pains to stress, urgent action is needed by every country and every sector, on every timeframe. But we also need to see action that does not disadvantage the most vulnerable.
Transform Trade is calling for Governments attending COP28 to commit to a climate waiver as a first step to ensure that no country faces trade penalties for trying to address climate change; to call an end to investor-to-state dispute settlement so that companies cannot sue nation-states for new climate measures; and to ensure intellectual property protections are formally aligned with Paris commitments.