WTO may serve as an appropriate forum for discussions on opening up trade in environmental goods and services that could further facilitate access to and diffusion of climate technologies, a report on international trade and climate change released by the multilateral trade body at the on-going COP27 meet in Sharm El-Sheikh on Monday said.

“Simulations using the WTO GTM (Global Trade Model) suggest that the elimination of tariffs, together with the reduction in NTMs (non-tariff measures) on a specific subset of EG (environmental goods), could make a contribution to reducing carbon emissions while contributing to an increase in exports and GDP in all regions,” the `World Trade Report 2022: Climate Change and International Trade’ stated.

The elimination of tariffs and the reduction in NTMs (a 25 per cent reduction in the ad valorem equivalent of NTMs) on EREG (energy related environment goods) and EPP (environmentally preferred products would raise global exports of the goods in 2030 by 5 per cent and 14 per cent above the baseline, respectively, the report noted.

India and several other developing countries have not been in favour of elimination of tariffs on environmental goods as there are apprehensions that it could lead to tariff reduction for dual use goods, that are used also for non-environmental purposes (for example pumps can be used for treating waste water but also for other purposes). This could be to the detriment of the domestic industry in poorer countries, they fear.

 Also, majority of environmental goods production takes place in developed goods while the share of poorer countries is low.  

“While trade itself does generate emissions from production and transport, trade and trade policies can accelerate the dissemination of cutting-edge technologies and best practices, and enhance incentives for further innovation while creating the jobs of tomorrow,” the report pointed out. 

“These are returns we would be unwise to forego, especially now that the big green investment push we need will coincide with rising real costs of capital and looming uncertainty about energy security due to geopolitical tensions and war,” said WTO Director General.

The WTO also provides trade-related technical assistance and capacity building to developing countries and LDCs, which can help to build climate resilient trade capacity, the report said. Current initiatives include Aid for Trade, the Enhanced Integrated Framework (EIF), and the Standards and Trade Development Facility (STDF).