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Mapping supply chain issues from a trade perspective
Green hydrogen has a number of uses. It can be used directly as an energy carrier and chemical input in multiple end-use applications. It can also be combined with a sustainable carbon source or with nitrogen to produce derivative compounds such as methanol or ammonia which can be used as feedstock for chemical production (e.g. plastics and fertilizers) or as sustainable fuels.
Conclusion
The clean energy transition is critical to achieve net zero goals and is a key element of most economies’ nationally determined contributions under the Paris Agreement to keep global warming under a 1.5° Celsius threshold. The clean energy transition also has trade integration potential as it helps to advance industrial development and addresses capacity constraints in energy generation capacity.
Acknowledgements
This publication was prepared by Visvanathan Subramaniam (Economic Affairs Officer WTO) and Michael Roberts (Head of the Aid for Trade Unit of the Development Division WTO) under the supervision of Deputy Director-General Xiangchen Zhang and Taufiqur Rahman Director of the Development Division. The publication was edited and reviewed by Anthony Martin and Helen Swain of the Information and External Relations Division.
Overview of the Aid for Trade initiative
The Aid for Trade initiative led by the WTO grew out of the 2005 WTO Hong Kong Ministerial Conference. Its aim is to help developing economies integrate into world trade by mobilizing additional development support to address supply-side capacity and trade-related infrastructure constraints in these economies. In 2006 the Task Force on Aid for Trade was constituted by the WTO Director-General to report to the General Council with recommendations on how to operationalize Aid for Trade.
Opportunities for trade integration in clean energy value chains
Nearly 40 per cent of anthropogenic GHG emissions are caused by burning fossil fuels to produce electricity (IEA 2022b). Decarbonizing electricity generation is a critical step toward achieving net zero goals. Target 7.2 of the UN Sustainable Development Goals (SDGs) calls for a substantial increase in the share of renewable energy in the global energy mix by 2030 (UN General Assembly 2015).
Executive summary
Energy generation infrastructure has long been identified by Aid for Trade stakeholders as requiring additional predictable and sustainable financing to enable developing economies and LDCs to participate more fully in international trade. The energy sector is one of the largest recipients of Aid for Trade support accounting for nearly 25 per cent of all disbursements (US$ 116 billion) over the 2010-21 period.
Buena Vista Social Corporate Responsibility Provisions in Regional Trade Agreements
Corporate social responsibility (CSR) has become an integral part of many companies' business strategy. A detailed analysis of 579 RTAs including 305 agreements currently in force and notified to the WTO (as of December 2020) reveals that a limited but increasing number of RTAs namely 65 agreements refer explicitly to CSR. These CSR-related provisions are particularly heterogeneous in terms of location in the RTA language scope and commitments.
The Interface between the Trade and Climate Change Regimes
As governments increasingly adopt policies to reduce greenhouse gas emissions concern has grown on two fronts. First carbon leakage can occur when mitigation policies are not the same across countries and producers seek to locate in jurisdictions where production costs are least affected by emission constraints. The risk of carbon leakage raises questions about the efficacy of climate change policies in a global sense. Secondly it is precisely the cost-related consequences of differential mitigation policies that feed industry concerns about competitiveness. We thus have a link between environmental and competitiveness perspectives that fuses climate change and trade regimes in potentially problematic ways as governments contemplate trade actions to manage the environmental and/or competitiveness consequences of differential climate change policies. On the trade side of this relationship we have the reality that the GATT/WTO rules were not originally drafted to accommodate climate change policies and concerns. The purpose of this paper is to analyze the relevance of certain WTO rules to the interface between climate change and trade focusing in particular on border measures technical regulations on trade standards and labelling and subsidies and countervailing duties. It concludes that in the absence of clear international understandings on how to manage the climate change and trade interface we run the risk of a clash that compromises the effectiveness of climate change policies as well as the potential gains from specialization through trade.
Environmental Quality Provision and Eco-Labelling
This paper is a literature survey of some relevant issues arising from environmental quality provision and eco-labelling schemes. First of all it is shown how the two topics are strictly related. Firms adopting a production process (or producing a good) more environmentally friendly than others (environmental quality provision aspect) may want to make it public (eco-labelling aspect). The survey addresses the question of optimal environmental quality provision (also as a policy tool) and firms compliance. With regard to eco-labelling its impacts on market structure are analysed. It hasn’t been possible to consider all issues like for example that of moral hazard in providing non truthful information. Different issues related to trade are also analysed even if the literature is not abundant on this yet. In the literature both aspects of environmental quality provision and eco-labelling are analysed using product differentiation models. The usual result is that multiple equilibria arise depending also on the parameters. Models are also not robust to different assumptions. Environmental quality provision and eco-labelling are also compared to more traditional policy instruments like taxes (or subsidies) and standards. From the empirical evidence it can be concluded that information plays a crucial role both for consumers’ and producers’ decisions. Consumers are willing to pay a higher price to be informed about the greenness of a good and a label can really be a determinant in their choice of which brand to purchase. On the supply side disclosing information about the environmental performance of a firm can affect investment decisions and its stock value.
The Impact of Disasters on International Trade
In this paper we examine the impact of major disasters on international trade flows using a gravity model. Our panel data consists of more than 170 countries for the years 1962-2004 yielding approximately 300000 observations. We find that the driving forces determining the impact of such events are the democracy level and to a lesser extent the area of the affected country. The less democratic and the smaller a country the more are its trade flows reduced in case it is struck by a disaster. We are also able to distinguish between the effect of a disaster on an importing and an exporting country.
Trade and Environment
In order to ensure transparency and to keep abreast of trade policies in support of sustainability the WTO Committee on Trade and Environment (CTE) mandated the WTO Secretariat to compile and collate all environment-related measures notified to WTO. The database also includes environment-related entries found in Trade Policy Reviews (TPRs).
Trade Policies for a Circular Economy
From its initial focus on minimizing waste generation the circular economy has evolved into a broad-based approach to make resource use more sustainable. A big part of the appeal of a circular economy is the opportunities it creates not only for resource savings and better human health and environmental outcomes but also for trade and economic diversification.
Trade and Deforestation
Forest plays a significant role in the overall balance of carbon in the atmosphere. Forest carbon sequestration can potentially reduce the accumulation of greenhouse gases in the atmosphere. However when deforestation takes place carbon is released to the atmosphere again. Globally it has been estimated that about 11% to 39% of all carbon emissions from human origin come from the forest sector (Hao et al. 1990). Regarding global warming the balance between forest conservation and deforestation can change forest sector activities from a solution to a problem and vice versa.
Typology of Environment-Related Provisions in Regional Trade Agreements
The last 25 years have witnessed a rapid increase in regional trade agreements (RTAs). Although RTAs generally aim at lowering tariff and non-tariff trade barriers an increasing number of trade agreements extend their scope to cover specific policy areas such as environmental protection and sustainable development. This paper establishes a comprehensive typology and quantitative analysis of environment-related provisions included in RTAs. The analysis covers all the RTAs currently into force that have been notified to the WTO between 1957 and May 2016 namely 270 trade agreements. While environmental exceptions along with environmental cooperation continue to be the most common types of environment-related provisions many other different types of provisions are incorporated in an increasing number of RTAs. The common feature of all environment-related provisions including environmental exceptions is their heterogeneity in terms of structure language and scope.
The Relation between International Trade and Freshwater Scarcity
It is becoming increasingly important to put freshwater issues in a global context. Local water depletion and pollution are often closely tied to the structure of the global economy. With increasing trade between nations and continents water is more frequently used to produce exported goods. International trade in commodities implies long-distance transfers of water in virtual form where virtual water is understood as the volume of water that has been used to produce a commodity and that is thus virtually embedded in it. Knowledge about the virtual-water flows entering and leaving a country can cast a completely new light on the actual water scarcity of a country. For example Jordan imports about 5 to 7 billion m3 of virtual water per year which is in sharp contrast with the 1 billion m3 of water withdrawn annually from domestic water sources. This means that people in Jordan apparently survive owing to the import of water-intensive commodities from elsewhere for example the USA.
National Environmental Policies and Multilateral Trade Rules
This paper provides an overview of institutional economic and legal aspects of the relationship between national environmental policies and the multilateral trading system. In particular it analyses some of the difficulties the WTO Dispute Settlement System faces when having to evaluate disputes on national environmental policies that have an impact on trade. From an economist's point of view it would be desirable that optimal environmental policies i.e. policies that correct existing market failures be ruled consistent with multilateral trade law. This paper argues that WTO law in theory provides appropriate tools to ensure rulings that are consistent with economic thinking. Yet the paper also argues that economists have a rather imperfect knowledge of the precise welfare effects of different types of environmental policies. In practice therefore it is questionable whether economists are able to give adequate guidance to legal experts when it comes to the evaluation of national environmental policies. This is one of the reasons why there continues to be some degree of uncertainty as to the possible interpretations of certain WTO rules in the context of environmental disputes.
Trade and Fisheries
In this report we first give a brief overview of trade in seafood and seafood production. We then review the basic bioeconomic theory of the fishery and pinpoint why fisheries are different from most other industries. We next review the theoretical literature on trade and renewable resources that shows how unconventional outcomes from trade liberalization can emerge. Given this background we discuss the most important policy issues in relation to seafood and trade including sections on managing the global commons and domestic trends in management. In the final section we discuss specific issues that are germane to the WTO and its rules.
How do natural disasters affect services trade?
This paper is the first in the literature to examine the impact of natural disasters on trade in services. We measure the magnitude of natural disasters using two distinct sets of variables and quantify the effect of natural disasters on trade in services using a structural gravity model.