Most Favoured Nation: The Environment Edition

What even is trade and the environment?

Unsurprisingly, given the whole international climate change negotiations thing, people have been talking a fair bit about trade and the environment recently. (Including me, obv.) But I do wonder if everyone talking about trade and the environment is talking about the same thing.

Because when people talk about trade and the environment, they could actually be talking about one (or a combo) of five things:

1. Liberalising trade in environmentally beneficial goods and services. This is classic trade policy stuff, so removing tariffs on wind turbines, making it easier for solar panel engineers to work all over the world. Could also include constraints on fossil fuel subsidies. That kind of thing.

2. Using trade as an incentive to deliver on environmental goals. For example, making access to the benefits of a trade agreement conditional on a country abiding by specific environmental rules. The trade benefits are the carrot.

3. Environmental policies that have a direct or indirect impact on trade. Think renewable energy schemes that include local content requirements, or plans to phase out palm oil-based fuels, or even the EU’s proposed carbon-border adjustment mechanism.

4. The climate impact of trade. Shipping, driving and flying things all over the world requires burning fossil fuels, which is bad. Right?

5. The trade impact of climate change. Climate change will increase the frequency and magnitude of extreme weather events which will in turn disrupt global supply chains.

There’s probably more. But my hunch is that if you’re talking to Greta about trade and the environment she’s probably thinking mainly about 4, if you talk to a trade lawyer they are probably thinking mainly about 3, if you talk to a government trade official they are probably thinking mainly about 1 (and reluctantly, 2) … but we should probably all be thinking a lot more deeply about 5.

So, what number are you?