WTO on the climate conference: “World trade can help with climate protection”

NAlong with state representatives, international organizations also take part in the climate summit. In an interview with tagesschau24 the deputy director general of the WTO, Jean-Marie Paugam, talks about the chances of world trade for the climate.

tagesschau24: For decades, the globalized economy has produced emissions and depleted the earth’s resources. Now the WTO says trade is part of the solution, not part of the problem. That sounds pretty contradicting, doesn’t it?

Jean Marie Paugam: Of course, trade contributes to emissions just like any other economic activity. There is a close correlation between the share of trade in world gross domestic product, which is between 25 and 30 percent, and the share of trade in emissions, which is also between 25 and 30 percent. In that respect you are right. We need to decarbonize trade. This mainly has to do with energy and transport as well as with the life cycle of the traded products. Trade is also part of the solution. First, trade is a factor in an efficient economy. The more efficient the economy is, the fewer natural resources it uses unnecessarily. Second, trade can strengthen the fight against climate change by promoting the development of green and clean technologies.

tagesschau24: However, according to estimates by the OECD, world trade is responsible for more than a quarter of global CO2 emissions.

Paugam: Yes, that’s right. Trade in goods accounts for 25 percent of global gross national product, as I said, so it also accounts for 25 percent of emissions. Most of it relates to transportation, so sea and air transportation. That needs to be decarbonized. Some big players, big companies have already started to decarbonize their transport. The rest is related to energy and the life cycle of the products. There has to be decarbonization. But trade can help spread the best technologies, which in turn can help reduce industry’s carbon footprint and energy bills.

tagesschau24: From your point of view, decarbonization is the keyword. Wouldn’t it be better to just fly less?

Paugam: Trade needs to be decarbonized. There is no dispute about that. For example, some shipping companies equip their ships with exhaust gas scrubbers that capture the CO2 from the flue gas. This has to happen. It’s a huge investment. On the other hand, there is climate-damaging behavior that can be changed through the WTO. For example, some of our members want to talk about fossil fuel subsidy reforms. And it’s true that fossil fuel subsidies drive emissions. The same applies to plastic. Plastic is associated with high emissions. Reducing the plastic footprint or the plastic weight in retail would contribute to the fight against climate change.

tagesschau24: Some activists are calling for a zero growth strategy. If economic growth has brought us to a point where the effects of climate change are destroying the lives of millions, don’t you have a point with that?

Paugam: There is always a link between the level of economic development and the level of environmental spending. With zero growth, everything would be frozen as it is today. I don’t think that would help economic development, human development and environmental development. A win-win strategy is the sustainable development that we need to work out to make trade sustainable.

tagesschau24: The WTO has traditionally advocated low trade barriers. Does that rule out higher environmental standards?

Paugam: We do indeed need higher environmental standards. We must ensure that these environmental standards do not unnecessarily fragment the world economic system. Let’s take steel for example. In the steel industry alone, an important industry with seven to eight percent of global emissions, there are 20 standards for decarbonization. If we could boil that down to one, two, three, maybe five standards, there would be a win-win situation where steel could be traded more easily and so it would have a bigger impact on decarbonization.

tagesschau24: Do we need a global carbon tax? And will we get one?

Paugam: That would be ideal. I wouldn’t say a global carbon tax, but a carbon price. No matter what you choose. The amount depends on the industry and also on the level of development. Because the idea is to make CO2 more expensive. This can be done through taxes, emission certificates, or regulations. And that is one of our problems in the world economy and trading system. All members have the same goal in mind, namely to make CO2 more expensive. However, they do not agree on the means. So we have to make sure that the means are compatible with each other.

tagesschau24: But in the end it’s all about the money, right?

Paugam: This has a lot to do with money, in the sense that you need an incentive to change your behavior. This applies to all sectors, whether agriculture or industry. You talked about money, and that has something to do with making money. Smart companies are taking fast steps towards decarbonization and will make money with the new, sustainable model. So it’s a threat and an opportunity at the same time.

tagesschau24: Her boss, WTO Director-General Okonjo-Iweala, is convinced that growth can be sustainable and fair at the same time. But if developing countries want to raise their living standards, provide electricity to their people, produce goods for trade, how are we going to convince them not to use cheap fossil fuels to power their economies?

Paugam: First, there is a principle that is recognized in both the WTO and the United Nations. The common but differentiated responsibility. It is true that developing countries must have the space and time to move towards the sustainable model. Firstly, they will also largely benefit from this themselves, because they will be the first to be affected by climate change. For example, the least developed countries lose 5 percent of their export opportunities every year because of climate change. You saw this in Pakistan, which went from being a net food exporter to a net importer in a matter of weeks. So developing countries have an interest in it and they also have a need because the market is moving in a certain direction. The preferences of the big markets will change towards the sustainable model if that’s how you want to sell it. And that applies not only to state policy, but also to private action. So if you want to sell to a big coffee buyer like a big American coffee chain, then they have to prove that they are carbon neutral. The same applies if you want to sell textiles to a large chain. So there is an incentive and there is market opportunity for developing countries because by their very nature most of them have lower carbon production.

tagesschau24: Well, after the disasters that we have experienced this year alone: ​​floods in Pakistan, forest fires in California, droughts in Europe that have cost lives and caused severe economic damage – when will it become too expensive from an economic point of view, but not the emissions to reduce?

Paugam: This is a key moment that we need to define. There is no answer in theory that I can give you, but I can give you an example of what we have done in the WTO. We had negotiations about removing subsidies for illegal fishing. It took us 20 years to do that. For the entire 20 years, countries didn’t know if they were going to win or lose. In fact, it was all about the common good to be helped. No one gained anything in these negotiations, but everyone lost because there was no result. In the last year we have succeeded and this is proof that trade talks can be transformed from simply exchanging trade concessions to working together for the common good. We must do the same with the climate.

tagesschau24: Do you think that will still happen this year?

Paugam: I always have hope, because I’ve seen that in the WTO, where we didn’t talk about sustainability, for example. And now we do, and not all, but most of our members have the willingness to work together. Some are not yet convinced, but more and more are becoming convinced. I gave you the example where we negotiated on fisheries for 20 years. That’s encouraging. And the climate conference can achieve just as much as we can in the WTO.