Globally Joined: Environment and Trade

Trade and environment policies should be closely intertwined, according to the recently completed research program Entwined, a program that explored how these arenas might work together and where they fail to do so.

Typically seen as in conflict with each other, the environment and trade don’t have to be, according to the ENTWINED syntesis report. The research in the program paints a positive picture, both “optimistic and practical”, despite some of the uncertainties and fraught interconnections between environment and trade.

Insights and conclusions from the research conducted under ENTWINED, and described in the ENTWINED synthesis report, provide an agenda for future research and some paths forward for potentially controversial arenas where commerce and the environment collide.

The big questions involve tensions between local, national and international actions taken in both realms, for trade and environmental policies. The ENTWINED project researchers have found that the situation has changed dramatically since the 1990s, particularly with the establishment of the World Trade Organisation (WTO) in 1995 to address global trade disputes and rules.

Research for ENTWINED explored the following issues, among others:

  • Transparency is necessary for accountability in the WTO when it comes to trade and environmental issues. Transparency can be achieved      with the participation of nongovernmental organisations, academics, and other parties, which can report on positive and negative actions taken, without compromising national governments’ responsibilities.
  • The WTO Committee on Trade and Environment is only one of the forums in which environmental aspects of trade are addressed. Other committees, such as the one on Technical Barriers to Trade or the Dispute Settlement Body, have also effectively addressed environmental issues, again usually through increasing transparency – a necessity in the WTO, as discussed above. The need for negotiation and dispute resolution can often be diffused through transparency provisions that are part of WTO rules.
  • Voluntary sustainability standards have been a major focus of ENTWINED      research, in particular, the trend in labeling for carbon neutrality or fair trade products has proven fertile ground for researchers looking at the economic impacts of these environmental classification schemes. The creation of new markets based on such labels can be seen as a public good, according to ENTWINED research. However, in some cases, voluntary labeling conceivably could allow companiesto mask the negative environmental impacts of their products. But if voluntary labeling schemes are accurate, consumers could use them to choose behaviors that protect the environment – and that could give      advantages to those products, from forestry to coffee. The jury may still be out as to whether this is unfair or fair trade practice. Transparency and free-flowing information are again key in this arena.
  • Governments are turning again to Green Industrial Policies to meet environmental goals. Climate change is one of the major issues these policies address. Because these policies involve government intervention in markets, they need to be carefully designed so that they do not unnecessarily affect trade. Finding the balance is proving to be a      challenge, and ENTWINED researchers have examined cross-border carbon      agreements, biofuels requirements and carbon pricing, among other issues.
  • Trade and international environmental agreements must work together. Meeting the challenge of global climate change is a prime example of where policies must align. ENTWINED      researchers have examined other multilateral environmental agreements and      treaties such as those meant to protect endangered species, manage electronic waste disposal, forestry and timber, and prevent the sales of “blood” or conflict diamonds. Sustainability has become another main goal, from local private and public endeavors to national governments to international interactions; meeting sustainability goals will require future policy frameworks that keep in mind both the environment and trade.

Details can be found in the ENTWINED synthesis report (pdf, 3.7 MB), which provides a road map for the future, as well as a short history of the evolution of the relationship between trade and environment.

While more research is necessary for many of these issues, one outcome is certain from ENTWINED research: addressing trade and environmental issues requires that each realm have more interaction with and openness to the other. Initially adversarial, the relationship between the environment and trade seems to have matured into mutual respect – but mutual incomprehension lingers. Environmental concerns cannot shut down trade, but neither can trade “checkmate” environmental issues – they must “live together and, in the best of cases, to help one another reach established goals”.

Updated: 2014-02-21