Action on Climate and Trade – a Developing World Imperative for Climate-Adjusted Trade Flows

19 Apr 2023

· World Economic Forum, World Trade Organization and World Bank Group will leverage existing analytical and capacity-building programmes to help developing economies use trade to meet their climate change adaptation and mitigation goals

· The collaboration, known as Action on Climate and Trade, will provide participating economies with climate action analysis specific to their trade flows and national circumstances

· The analysis and dialogue will identify opportunities to leverage trade and investment policy for participating economies’ National Adaptation Plans and their Nationally Determined Contributions under the Paris Agreement

Geneva, Switzerland, 20 April 2023 – Three international organizations announced today a new pilot initiative, Action on Climate and Trade (ACT), to help developing economies leverage trade and meet their climate change adaptation and mitigation goals. The World Economic Forum, the World Trade Organization (WTO) Secretariat and the World Bank Group will work with participating developing economies to develop climate-related analysis specific to their trade circumstances. Domestic stakeholders will be involved in the analysis through public-private dialogues.

“Urgent action is needed to meet climate goals. Many companies are undertaking supply chain decarbonization and looking to green trade. Developing economies must be empowered to identify new opportunities and shape a future net-zero global economy,” said Sean Doherty, Head, International Trade and Investment, World Economic Forum.

All economies are at a critical juncture for tackling climate change and growing sustainably. Trade as an engine of economic growth must be aligned to these objectives. As highlighted in the WTO World Trade Report 2022, global cooperation on international trade and related investment needs to be mobilized to enhance the mitigation of and adaptation to climate change, support a just low-carbon transition and minimize trade frictions.

“The climate crisis is calling for rapid and effective collective action using every tool in the toolbox. Trade policy offers WTO members, including developing-country members, a wide variety of options to enhance their climate change adaptation and mitigation strategies. This new pilot initiative by the World Bank Group, the World Economic Forum, and the WTO Secretariat will focus on supporting developing members to leverage trade to improve their climate resilience and decarbonization plans in a way that is aligned with their specific needs and local circumstances,” said Hoe Lim, Director, Trade and Environment Division, WTO.

The World Bank Group report, The Trade and Climate Change Nexus, further highlights that all developing economies have much to gain by improving their policies on trade and the environment.

“By prioritizing sustainable practices and harnessing the power of international trade, developing countries can not only mitigate the impacts of climate change but also create new economic opportunities and build a better future for their citizens,” said Mona Haddad, Global Director for Trade, Investment and Competitiveness, World Bank Group.

World Economic Forum communities have identified 25 technologies and accompanying services that trade policy-makers should prioritize to accelerate emission reductions. These technologies sit across five categories found in many economies’ climate action plans – refrigerants, energy supply, buildings, transport, and carbon capture and storage (CCS). The Forum believes business supply chains must be an important driver of sustainability and that trade policy can play a positive role in addressing inclusive trade challenges.

ACT will provide developing economies, and especially the least developed among them, with tailored insights to best plan for trade impacts from climate change, leverage climate-trade opportunities and define areas of collaboration with trade partners. In particular, unique country-level analysis will explore how trade policy tools can promote a country's climate change adaptation and mitigation strategies – including options that could help deliver or improve the participating country's National Adaptation Plans or Nationally Determined Contributions under the Paris Agreement on climate change.

ACT offers participating economies a multistakeholder, bottom-up model for exploring specific ways in which trade can be leveraged to enhance climate change mitigation and adaptation efforts. It mirrors the Paris Agreement structure where climate efforts are determined by each country based on priorities, interests and challenges, as well as strong stakeholder contributions. Egypt has taken interest in ACT and is likely to join the pilot phase.

In addition, ACT will help policy-makers and stakeholders in developing economies engage in global processes where appropriate, such as the WTO's Committee on Trade and Environment, and Trade and Environmental Sustainability Structured Discussions. It can also support developing economy engagement in the recently launched Coalition of Trade Ministers on Climate.

Notes to editors
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