United Nations Conference on Trade and Development (UNCTAD)
  • Date submitted: 1 Nov 2011
  • Stakeholder type: United Nations & Other IGOs
  • Name: United Nations Conference on Trade and Development (UNCTAD)
  • Submission Document: Download
Keywords: Crisis (1 hits), crises (0 hits),

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The Trade Dimension of the Green Economy

The 2012 Rio+20 Conference will provide an opportunity to reaffirm the positive links between trade, environment and development, and allow developed and developing countries alike to cooperatively define and shape a green economy that supports sustainable development goals by catalyzing new investments, income sources, jobs and enhanced social equity across and within countries.
A key thrust of the green economy concerns unlocking technological progress so that economic and social objectives can continue to be advanced. However, beyond advancing environmental sustainability, the green economy must be development-centered to improve living standards across and within countries by generating new employment opportunities for the poor and enhancing their access to basic services such as energy, water, transportation, communications, healthcare and education.
The green economy should also be inclusive. Action towards preserving our global common goods start at the national level and all countries urgently need ?green? technologies to combat climate change, preserve biodiversity, reduce pollution and conserve natural resources wisely. And all countries require the economic growth and jobs that the green economy will promote going forward. No population group should be marginalized from a full and beneficial participation in a global green economy.
It is evident, however that a successful transition to a development-centered and inclusive green economy will not be automatic. As in the case of the recovery efforts from the financial Crisis of 2008-09, paving the way for a more sustainable global economy necessitates wise forward-looking policy interventions. The transition must be carefully designed and managed by an active development state to generate gains for all, across and within countries, as the transition evolves. While policies and actions are needed at the national level to drive a green economy transition, they are also essential at the international level to steer the transition and spread it globally. The latter requires addressing significant challenges facing many developing countries that lack the sufficient human, technical and financial capital needed to structurally transform their economies. To fill these gaps, international cooperation will be essential in providing capacity building, facilitating technology transfer and coordinating financial assistance.
International trade represents a powerful channel for spreading green economy gains among countries at the global level. By bridging national markets and transmitting growing environmental and social preferences of firms and consumers in world markets, trade plays a central role in the diffusion of green goods, services, technologies and more sustainable production methods among countries. While trade allows countries to import green products that are not produced domestically in sufficient quantity, it also allows countries to accrue export gains for those green products that they produce competitively.
While it is clear that trade can transmit green economy benefits among countries, it is also evident that current trade patterns will be impacted in various ways in a greening global economy. The green economy may pose threats to market access for developing countries due to changes in the global marketplace. Such changes include greening national regulation, national and private standards, and purchasing patterns of consumers. International cooperation will thus be essential to support developing countries seeking to sustain and deepen their participation in world trade, not only for goods and services that are inherently ?green? but more generally for all goods and services that are progressively becoming ?greener?. In addition, national green economy policies advanced through government procurement, industrial policy, subsidies and trade restrictions may give rise to what has been called new forms of "green protectionism". International cooperation will be essential to prevent, and when necessary to effectively address, adverse impacts of national green economy policies on international trade.

Ways forward

The goals of a green economy are broad, comprehensive and ambitious, but they are not new. A lot of what is implied in a green economy dates back to Agenda 21 adopted at the Rio Earth Summit in 1992. In particular, with regards to the interface of trade and green economy policies, chapter 2 (B) of Agenda 21 which calls upon the international community to make trade and environment mutually supportive remains a valid basis for action.

The 2012 United Nations Conference on Sustainable Development will focus on promoting a green economy that could act as catalyst to accelerate progress on sustainable development and poverty eradication, yielding positive outcomes for the economy and environment, and for developing and developed countries alike. In this context, trade can play an important role in sustainable development and the transition to a green economy. Already in 1992, it was acknowledged that an open multilateral trading system, supported by the adoption of sound environmental policies, can have a positive impact on the environment and contribute to sustainable development. Twenty years on, the fundamental message remains that mutually supportive trade and environment policies can promote sustainable development. The 2012 Conference will be an opportunity to reaffirm these links and reinstate Principle 12 of the Rio Principles on Environment and Development as a guiding tenet.

There have been concerns that measures put in place to advance the transition to a green economy could potentially create trade distortions or new forms of "green protectionism". WTO trade rules provide policy space for countries to promote green economy sectors. Equally, they offer a framework to guard against green protectionism and to ensure that these measures are not disguised restrictions on trade and are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries. Thus, the multilateral trading system must continue to be strengthened to meet future challenges in this area.
Negotiations on the removal of trade distortions, in particular harmful subsidies such as fisheries and agriculture subsidies, and the elimination or reduction of tariff and non-tariff barriers to environmental goods and services should be an integral part of an equitable transition to a green economy.

Sustainable trade is a trading system that ties to important human values, welfare goals and inclusive growth, assisting those developing countries that are marginalized in the global trading arena. Concerns have been raised that a green economy will introduce constraints on growth, competitive disadvantages and unequal benefits among countries. Advancing a green economy agenda thus requires reinforced commitment to Principle 12 of the Rio Principles and calls for policy coherence to ensure that trade and development and the protection of the environment can be mutually supportive. Trade policy needs to be accompanied by complementary policies in both the social and environmental spheres, while ensuring that trade rules support a global transition to a green economy.

Moreover, capacity building activities of international and regional organizations and international programmes must be furthered to assist developing countries to design mutually supportive and domestically-driven trade and green economy policies, enhance regional cooperation in trade and environment, identify green export opportunities, and develop capacities in the production and export of green goods and services.


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