As the world bears witness to a proliferation of worrying climate news, from record-breaking heat waves to hurricanes to forest fires, it also seems to see a parallel growth of “solutions”—few of which seem to be getting us where we need to go.
There is no shortage of ideas and innovations, along with a rapid roll-out of new green technologies, even while the world’s carbon dioxide emissions continue to grow.
Among the latest new catchwords gaining prominence is “green trade,” which influential institutions like the World Bank, the Word Economic Forum, and the World Trade Organization (WTO) are promoting with enthusiasm. Green trade is based on the belief that doubling down on economic growth, through an expansion of trade and investment globally, is the only viable solution to the climate crisis.
It is convenient for politicians and policy makers looking to meet simultaneous demands for economic growth and reduced emissions. But what genuine prospects for environmental change does green trade offer?
The challenge of green trade
Understanding green trade and its growing prominence requires recognizing the concerns it seeks to address—the enormous barriers to decarbonization of the global economy.
Despite expressed concern for climate change from politicians, CEOs and diplomats, countries rich and poor continue to rely on an economic model based on expanded production, consumption, investment and trade—and all of the emissions associated with them.
Symbolizing the depth of these challenges, is the controversy over Azerbaijan, a country heavily dependent on oil and gas exports, hosting the upcoming COP 29 global climate negotiations. A recent New York Times profile of the petrostate explores how wealthy importing countries are equally complicit in these contradictions. Europe, for example, “in recent years barred its banks from financing fossil fuels, [even as] it gobbled up Azerbaijani gas and now hopes others will fund the expansion of the pipelines.”
Green trade proposals emerge from this tension, recognizing that something must be done, while globally traded goods and services account for around 25 percent of global carbon emissions. To the WTO, this means that: “Paradoxically, economic progress is both the cause of and the solution to the climate crisis.”
Trade, argues the World Bank, can promote resilience and green growth, and be “a central part of the solution—enhancing both mitigation and adaptation”
Global trade, they argue, can promote the production and distribution of Environmental Goods and Services (EGS), green knowledge and technology, food and medicines, while helping countries diversify away from climate-vulnerable industries, like tourism and agriculture.
According to the WTO, less than five per cent of all traded goods in 2020 were aimed at limiting or preventing environmental damage. With more trade liberalization on EGS, trade policies can shift demand away from “dirtier” carbon-intensive products and towards greener ones.
What’s missing in green trade
There are numerous obstacles to this harmonious vision, tossed up by the real-world conditions under which trade takes place.
First, it is not at all clear that more trade can solve the climate crisis. Proponents advocate expanded trade for its ability to make goods and services cheaper—which means more production, more consumption, and, barring a massive and immediate transformation in energy use, more emissions.
While several high income countries have shown signs of decoupling their growth from emissions, this is not occurring nearly fast enough to meet their Paris Agreement targets. Emissions in the Global South, moreover, where the majority of manufacturing now takes place, are growing rapidly, accounting for 75 per cent of global emissions in 2023.
Second, critics have long argued that the existing global trade architecture inhibits climate action through powerful investors’ rights provisions that are often tacked on to trade agreements. This has allowed transnational companies to sue governments in private tribunals for numerous policies, including climate policies.
According to the UN Special Rapporteur, David R. Boyd, corporate arbitration against states over policies aimed at protecting the environment have increased substantially since 2000. This worrying uptick has been led by fossil fuel companies, who have won 72 per cent of cases at the merits stage, “forcing Governments to pay more than $77 billion.”
Finally, even if green trade can spur substantial decarbonization—which is by no means certain—critics argue that existing global trade rules are biased toward rich countries and will merely be replicated under a green trade system, producing new “green” trade injustices.
Green trade policies might facilitate the spread of new technologies to low- and middle-income countries, but through global value chains dominated by corporations from rich countries and emerging economic leaders.
Representatives from the Global South, moreover, are concerned that climate policies in rich countries are creating unnecessary trade barriers that neglect the specific challenges of developing countries, international commitments to special and differential treatment and common but differentiated responsibility, and “equitable market access for developing countries.”
Instead, they have argued for hundreds of billions of dollars in funding to facilitate decarbonization, capital investment, support for loss and damage, debt relief, and technology transfer beyond the strict limitations of existing Intellectual Property Rights (IPR) rules. This is most clearly exemplified by the Bridgetown Initiative, which seeks to re-write global financial rules and create infrastructure through which rich countries can pay back their climate debts and facilitate decarbonization in the Global South
Wealthy countries have acted on some of these issues, but without the urgency or intense commitments required. In 2023, for instance, the international community agreed to a climate loss and damage fund to assist poor countries in dealing with the negative impacts of climate change. So far, however, rich countries have pledged around $650 million dollars which, notes journalist Naveena Sadasivam, is “a sliver of the estimated need,” which could run as high as $580 billion per year by 2030.
Green trade, green tensions
Green trade’s appeal lies in its attempt to reconcile competing objectives, between reducing emissions to save the planet and increasing economic growth. It is an idea not just to meet the fickle desire of wealthy elites, disproportionately in rich countries, but to meet real and urgent demands by the poor and middle class in search of jobs, growth, infrastructure, and economic opportunities.
The prospects of green trade, however, are little more than fantasy if they fail to recognize the heavy burden of global inequalities and the injustices and conflicts they invariably create.
This is true for the power given to transnational corporations in trade agreements, which trade justice activists have pushed back against with important success in recent years, as well as with the major imbalances in global trade rules and regulations—green or otherwise.
From this vantage, campaigns like the Bridgetown Initiative are not just “good ideas” that should, ideally, be taken seriously, advanced by those hoping against hope for a fairer world. They are essential tools for addressing the climate crisis.
Without them, the countries of the Global South will likely continue to question climate initiatives in the North, often viewed as green protectionism, and the global consensus required for what Amnesty International appropriately terms “a full, fast, fair and funded fossil fuel phase out,” will remain elusive.
If this is the case, the dreams of green trade could well be overwhelmed by an escalation of green tensions.
