The world has come together in an unprecedented effort to tackle global warming.
Following the historic adoption of the Paris Climate Agreement in December 2015, governments embarked on a ratification race which lead to the deal’s entry into force in November 2016. The speed of this process shows the world’s commitment to tackle the tremendous environmental, economic and social risks climate change poses, including for sustainable growth and development.
Countries must now put their words into action by following up with ambitious climate measures and they must do so immediately. According to the Intergovernmental Panel on Climate Change, the window of opportunity to act is shrinking, with global emissions having to drop by 40 to 70 percent between 2010 and 2050 and falling to zero or below by 2100 to have a good chance of staying below 2°C.
Successfully responding to this challenge will require supportive policies across many areas. Trade frameworks and policies that help drive the transition to a low-carbon economy will be crucial in this regard. Measures to achieve this range from trade liberalisation for climate-friendly goods and services to phasing out inefficient fossil fuel subsidies or providing space for climate-friendly subsidies.
At the same time, it is important to address countries’ concerns about how climate measures, including those implemented by others, may impact their economies and the competitiveness of their industry. Such considerations are likely to intensify under the decentralised nature of the new climate regime where each country determines its own level and type of climate contributions, expressed through nationally determined contributions (NDCs). In this context, climate measures are also expected to increasingly probe the limits of trade rules. If such concerns are not adequately dealt with, they risk undermining climate goals.
In light of the new climate architecture and the need to significantly scale up action, it is important to take a fresh look at the climate-trade interface. The dialogue will therefore explore key interactions between trade and the implementation of the Paris Agreement to inform more coherent policy-making where the potential for trade to positively contribute to the climate action effort is realised, while ensuring that climate measures do not unnecessarily distort trade but rather promote an open economic system that contributes to sustainable, equitable and inclusive development.