Climate Change And Trade Agreements Friends Or Foes
But the big issue that is overlooked, at least in the SDGs, is how trade can help the environment. The relationship between trade and the environment is complex and certainly not always positive. For example, global agriculture trade has led to agricultural expansion, deforestation and loss of demining in producing countries. The export of soybeans and palm oil generates income to countries such as Brazil, Indonesia and Malaysia, but intensive agriculture of these crops also results in the destruction of tropical forests and habitat, agriculture and the destruction of soil and water. (See SDG #6, which focuses on reducing water scarcity and improving access to safe drinking water, and the SDGs #15, which aim to preserve terrestrial ecosystems such as forests and wetlands. In the meantime, measures such as labelling to encourage more climate-friendly policies could, under current proposals, be challenged as “technical barriers to trade”, despite the potential for trade and climate cooperation, the weight of historical evidence in the other direction is heavy. The overall reduction in tariffs has increased trade in carbon-intensive and polluting products, such as fossil fuels and wood, more than for environmental products. In the coming months, the ICC will hold a series of consultations to meet with business leaders, policy makers, academic experts and economists to discuss the link between international trade and climate change. These consultations will provide a platform for heads of state and government to discuss and exchange ideas on how to coordinate international trade and climate change policies. How trade can support the economic pillar of sustainable development is quite obvious.
In recent decades, we have seen the important role of world trade in reducing poverty, job creation and growth. According to the World Bank and the WTO, developing countries accounted for 48% of world trade in 2015, up from 33% in 2000. Meanwhile, the number of people living in extreme poverty halved between 1990 and 2015. Trade helps provide people with more and better jobs, reduces commodity prices and stimulates the growth needed to end poverty. (See the Sustainable Development Goal (SDG) #1 aimed at eradicating poverty and the SDGs #8 focused on decent work and inclusive economic growth.) If the EU decides to break its dependence on fossil fuels, it will have to make significant changes to its energy infrastructure, which will require both massive new investments and a series of new transition assistance strategies. However, trade agreements such as the EU-Canada Agreement (CETA) and the proposed TTIP will allow the EU to be sued by Canadian or US companies using the powerful Investor State Settlement Mechanism (RDIE) – recently renamed The Investment Court System. ISDS will allow fossil fuel companies to sue European governments outside European judicial systems if they feel their profits have been affected – even if these measures have been taken to prevent catastrophic climate change. The EU and its member states have the prospect of being sued – like the US government under the North American Free Trade Agreement (NAFTA) for blocking the Keystone XL oil sands pipeline (see below) – for potentially billions of dollars if they act to prevent a future with fossil fuels.