The initial years of the 21st century witnessed universal economic growth. The fundamentals of globalisation appeared to be getting stronger. The 2008 financial crisis raised a few uncomfortable questions. Critics such as Nobel Laureate Eric Maskin argued that it has benefitted only a select few. As countries, including major economies, faced rising unemployment and inequality, a political class propagated inward-looking policies, rather than expanding the realms of globalisation to shore up the growth prospects.
On the other hand, with increasing awareness and instances of natural disasters, many demanded urgency in addressing the climate crisis. There were calls to adopt more “sustainable approach” towards achieving development goals that achieve high economic growth without adversely affecting the prospects for future generations. The Paris Climate Agreement showed that leadership from various countries can collaborate in tackling the effects of the climate crisis. However, like global trade, the climate crisis action agenda also witnessed a breaking down of consensus — such as the withdrawal of the United States (US) from the Paris deal.
The coronavirus pandemic has shaken the foundations of the world order. It has taught the global leadership that there is no alternative to mutual coexistence, or in the words of Thomas Freidman, “the world has become even flatter”. Globalisation will undergo a radical redesign. Countries will beef up their home-grown manufacturing capabilities for “products and services of essential nature”, while, at the same time, also try and find substitute locations as a buffer for their existing supply chains.
As the world witnessed prolonged lockdowns with minimal human interface and movement, the planet went into an “auto-healing” mode. The post-Covid-19 world offers an invaluable opportunity to bring in greener policies for economic recovery. This also offers us a golden chance to create a greener and more balanced rules-based global trade and commerce.
As the World Trade Organization (WTO) celebrates its silver jubilee this year, the Green Trade Organisation (GTO) can act as its most suitable extension. While the WTO activities and rules mention conservation of the environment, there is a definite scope for further concrete action on this front.
Under GTO, the rules-based order of WTO can be expanded to assimilate facets of trade and commerce from the climate crisis perspective.
One, the “greenability” of production supply chains: The GTO will focus on ensuring that the developing countries, the global south, which are often used in the less productive stages of the supply chain (for procuring raw material and farm produce) are accorded effective protection from anti-climate policies that aim to expand profits at the cost of the planet.
Two, Intellectual Property Rights (IPR) on climate crisis mitigation products and services: Over the years, the IPR regime has witnessed a spectacular growth in technology and pharmaceutical sectors. Today, we realise how significant human health is for a nation’s progress. For its equitable access globally, we need to develop a robust IPR framework related to climate crisis solutions being developed across the world.
Three, the taxonomy and accounting framework for promoting ecologically balanced production processes: This area has witnessed various effective measures being undertaken — especially in the developed countries — such as the Emission Trading System (ETS) and Carbon Credits framework. However, in many parts of the world, there is still an absence of a credible institutional framework that promotes the use of green accounting and tax-based policies.
Four, specialised dispute resolution mechanisms on issues of the climate crisis: As the global trade and services systems become more intricate in a world increasingly vulnerable to the climate crisis, there is a significant increase in international disputes on the climate crisis. It will need a mechanism which creates an enabling legal framework, to help resolve such issues, both at the national and international level.
In the past, efforts have been made to set up similar structures within the WTO regime. In July 2014, Canada along with other WTO members such as China, the European Union, Japan and the US launched negotiations for a new WTO plurilateral agreement on environmental goods that sought to eliminate tariffs on a range of environmental goods. However, as governments across the world implement relief packages and create a favourable climate for economic activities, the time is ripe for a “Green Trade Framework” that promotes the use of greener technologies and production systems. The GTO should lead to tremendous positive externalities for the planet such as the decline in the exploitation of natural and man-made resources, especially in the middle- and low-income countries; an improvement in the standard of life with the fall in pollution levels; transparent and accountable protocols and systems to deal with effects of climate change-induced by global trade activities.
Over the years, globalisation has helped boost economic growth and reduce extreme poverty. The coronavirus pandemic has made it clear that we need to look beyond short-term solutions. We cannot sideline climate action. But it is to create a sustainable and more inclusive planet by providing citizens with a suitable platform to undertake economic activity in an ecologically responsible manner. The creation of a Green Trade Organization is a step in the right direction.
Jayraj Pandya is pursuing a Master’s degrees in Advanced Global Studies at the University of Sciences Po, Paris
The views expressed are personal