WTO chief warns of climate regulation struggles for emerging markets

Despite attempts, the WTO has not been able to successfully integrate climate measures into trade agreements. Hopes pinned on COP29 to bring about a mediation

Days before COP29 begins, which is also being dubbed the ‘Finance COP’, World Trade Organisation (WTO) Director-General Ngozi Okonjo-Iweala acknowledged the challenge of balancing out trade interests and economic growth of developing countries with environmental protection measures.

“Environment-related measures present significant challenges for market actors, especially in developing countries where businesses may need to comply with divergent standards to access international markets,” said Okonjo-Iweala during a meeting with business leaders and personnel from top agricultural companies earlier this month, according to a report by Third World Network.

Conversely, prioritising trade which enables growth of developing countries might go against one of the most important conventions in the climate movement- the United Nations Framework Convention on Climate Change (UNFCCC). Its primary goal is “preventing dangerous human interference with the climate system”. And the WTO’s actions might obstruct this. 

The complex relationship between business interests, trade and environmental protection is not new. In fact, a paper outlined how trade liberalisation is detrimental to the environment as there is an increase of emissions, but conversely, higher growth leads to lower emissions in the long run.

Conflicting interests

Since 1997, around 8,661 environment-related notifications have been submitted to various WTO committees. This points to the urgent need to create robust regulations around global trade and environmental regulations, in a balanced way which does not hurt either business interests or the environment.

While Okonjo-Iweala advocated for establishing dialogue between policy makers and businesses to ensure that environmental regulations are not detrimental to the incomes and livelihoods of marginal farmers, she did not comment on the significant developmental restrictions that developing countries might face. Especially as developed regions like the European Union have plans to put strict environmental measures in place like the Carbon Border Adjustment Mechanism (CBAM) or trade-related deforestation measures, according to people familiar with the matter as told to the news agency.

They further said that trying to integrate environmental regulations into world trade doesn’t have great prospects in current times, when geopolitics is strife with worsening geopolitical and geoeconomic tensions.

Trade versus environment

Including trade in Nationally Determined Contributions (NDCs) – which are due for an update next year – can be important for “achieving a low-carbon, resilient, and just transition”, feels Okonjo-Iweala.

She has repeatedly tried to include trade in NDCs through the “investment facilitation pathway” since COP27 in Egypt. Along with the US and EU, she also attempted to integrate climate measures into trade agreements at WTO’s 13th ministerial conference (MC13) outcome document in Abu Dhabi earlier this year. However, both attempts did not yield any significant results.

Paragraph 15 of the MC13 outcome document (WT/MIN(24)/DEC) reads: “In recalling the objectives in the Marrakesh Agreement and in recognizing the role that the multilateral trading system can play in contributing towards the achievement of the UN 2030 Agenda and Sustainable Development Goals, in so far as they relate to the WTO mandate, we underscore the importance of trade and sustainable development in its three pillars – economic, social, and environmental.”

Trade plays a crucial role in global development, but the WTO’s efforts to incorporate climate measures into trade deals face some significant challenges. However, the alignment of trade and environmental goals is becoming increasingly urgent in order to achieve meaningful climate impact.

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