Where Do WTO Trade and Environmental Sustainability Initiatives Stand Today?

Last December marked a historic moment for trade and environmental sustainability discussions. Days before entering 2022, which marks 50 years of the symbolic start of enhanced multilateral environmental cooperation with the Stockholm Conference, three ministerial statements were adopted at the World Trade Organization (WTO) addressing how the multilateral trading system could contribute to a variety of pressing 21st-century environmental challenges. Eighty-one members representing around 86% of world trade signed at least one of the ministerial statements. Importantly, more than half were developing country members, including several least-developed countries.

The wide range of topics and the diversity of members supporting these initiatives—from large economies such as the European Union, the United States, China, Russia, and Saudi Arabia to Small Island Developing States such as Barbados and the Maldives—is a testament to how WTO members increasingly see trade and cooperation under the framework of the WTO as part of the solution to the triple planetary crisis.

Revitalized Agenda on Trade and Environmental Sustainability

The WTO’s work on trade and environmental sustainability has intensified in recent years. Reflecting the increased interest and engagement on the topic, WTO members, facilitated by successive chairpersons, started the practice of organizing a series of topic-specific side events around the fall meeting of the WTO Committee on Trade and Environment (CTE). This practice became known as the WTO Trade and Environment week.

In 2020, this led to two concrete outcomes: the launch of Trade and Environmental Sustainability Structured Discussions (TESSDs) and the inaugural meeting of the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade (IDP). Furthermore, co-sponsors of the Fossil Fuel Subsidies Reform (FFSR) initiative, whose original ministerial statement was signed at the WTO’s 11th Ministerial Conference (MC11) in December 2017, have similarly continued their work, enlarged their membership, and renewed their efforts.

The initiatives share a common goal: to ensure that trade and the WTO contribute to addressing environmental degradation and climate change.

The initiatives share a common goal: to ensure that trade and the WTO contribute to addressing environmental degradation and climate change. They involve in their work (and benefit from) the expertise of external stakeholders such as civil society groups, businesses, academia, and other international organizations to enhance the understanding of the challenges and opportunities at the intersection between trade, environment, climate change, and sustainable development. The initiatives are open to all interested WTO members, and co-sponsors have vowed to continue to be transparent and regularly report their discussions to the CTE.

Historic Launch of Three Ministerial Statements

Membership in the three initiatives expanded significantly last year and, despite the postponement of MC12, trade ministers under each of the three initiatives launched their respective ministerial statements (statements: TESSD WT/MIN(21)/6/Rev.2; IDP WT/MIN(21)/8/Rev.2; FFSR WT/MIN(21)/9/Rev.1) in a joint event on December 15. For the first time in the WTO's history, three ministerial statements have placed tackling environmental challenges as the central objective and trade as the tool to achieve it, including with direct references to climate change and the Sustainable Development Goals.

For the first time in the WTO's history, three ministerial statements have placed tackling environmental challenges as the central objective and trade as the tool to achieve it, including with direct references to climate change and the Sustainable Development Goals.

The statements underscore the urgency of global action and cooperation to achieve concrete results on trade and environmental sustainability issues at the WTO while avoiding duplication of efforts. The needs of developing countries and a just transition are also recognized and given particular attention. Under their own respective frameworks, the statements also chart the work forward for concrete and effective outcomes with MC13 as the horizon.

Overview of the Three WTO Environment Initiatives

Trade and Environmental Sustainability Structured Discussions

In November 2020, 53 WTO members launched TESSD, which now has 71 co-sponsors representing 84% of world trade in goods and services. The TESSD’s ministerial statement identifies environmental sustainability as a central issue for the WTO agenda and sets out future work for the initiative. TESSD convenes “structured discussions” for interested WTO members, including sessions dedicated to exchanges with external stakeholders from civil society groups, international organizations, the business community, and academia.

TESSD meetings have covered a wide range of topics, such as trade-related climate measures (including carbon border adjustments), circular economy, sustainable supply chains, environmental goods and services, sustainable food and agriculture, fossil fuel subsidies, developing countries’ needs and priorities, and greening Aid for Trade. The work in 2022 will prioritize trade-related climate measures, environmental goods and services, circular economy, and environmental effects and trade impacts of relevant subsidies.

Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade

Also launched in November 2020 by 12 WTO delegations, IDP’s co-sponsorship has expanded considerably, with 68 co-sponsors today representing about 75% of global plastics trade. The IDP aims to complement ongoing international efforts (including processes under the fifth session of the United Nations Environment Assembly and the Basel Convention) by improving trade cooperation to support domestic, regional, and global efforts to reduce plastics pollution and transition to a more circular and environmentally sustainable global plastics economy.

The discussions and the IDP Factual Report of 2021 have improved understanding of trade measures taken to address plastics pollution; plastics trade trends; international processes and efforts; and the technical and regulatory capacity needs of developing countries. Based on the knowledge gained, the IDP’s ministerial statement reaffirms the commitments of co-sponsors to strengthen the trade dimension of efforts to tackle plastics pollution. It presents a list of actions such as sharing experience on data collection regarding trade flows and supply chains, strengthening cooperation with other international regulatory processes, and identifying environmentally sustainable trade policies, mechanisms, and effective alternatives.

Fossil Fuel Subsidy Reform

Twelve members signed the FFSR’s first ministerial statement during MC11. Building on that effort, the initiative has renewed its statement, which 45 WTO members support. The renewed statement seeks the rationalization and phase-out of inefficient fossil fuel subsidies that encourage wasteful consumption along a clear timeline and calls on WTO members to join those efforts. The statement recognizes that reforming fossil fuel subsidies must consider the specific needs and circumstances of developing countries and minimize the possible adverse impacts it may have on their development. It underscores the role of trade and the WTO in enabling progress toward sustainable development.

The statement identifies the WTO as a forum to advance discussions to achieve ambitious and effective disciplines on fossil fuel subsidies, including through enhanced transparency and reporting to enable the evaluation of the trade and resource effects of fossil fuel subsidy programs.

Next Steps and Work for 2022

Each initiative is now working to adopt a work program for 2022 and is expected to hold technical meetings throughout the year. Among the expected objectives for the initiatives for this year would be to keep the momentum and ambitions high, enlarge membership, and advance technical work with a view to concrete outcomes in the lead-up to the next WTO ministerial conference.

This calls for a change in mindset that seeks “win–win–win” opportunities by addressing the challenges of the global commons rather than narrowly defined national interests.

They show a WTO that is evolving to become more fit for purpose and more agile in addressing issues of the global commons and making trade work for people and the planet. The WTO remains a unique forum where all members can bring global issues to the table with the view of finding solutions. Across every dimension of sustainability—economic development, social inclusion, and environmental conservation—leveraging the full power of trade and trade policy will help us achieve our goals more effectively and efficiently.

Members participating in these initiatives have already demonstrated considerable political will in moving ahead, despite the postponement of MC12. They will need to do the same, if not more, to expand the membership and deliver results. This calls for a change in mindset that seeks “win–win–win” opportunities by addressing the challenges of the global commons rather than narrowly defined national interests.

Aik Hoe Lim (Director), Daniel Ramos (Legal Officer), and Gergana Kiskinova (Economic Affairs Officer) are from the Trade and Environment Division at the WTO. The views expressed are those of the authors and cannot be attributed to the WTO or its members.