Some WTO members target major economies’ harmful green policies

Some World Trade Organization members are considering calling on governments to curb trade-distorting policies for the green transition, as concerns grow that some unilateral measures and a subsidy race by the world’s leading economies is stirring protectionism.

Countries led by Paraguay participating in the WTO ministerial meeting in Abu Dhabi were discussing on Wednesday evening issuing a statement to call out the harmful consequences of “green,” market-altering measures.

The nations “call on all Members to refrain from imposing of unilateral trade-related environmental measures that create unnecessary obstacles to trade or arbitrary or unjustifiable discrimination between countries,” according to a draft of the statement seen by Bloomberg News in the capital of the United Arab Emirates. 

They “encourage enhanced transparency of trade-related environmental measures applied by Members,” according to the draft text still subject to changes before adoption.

While the wording doesn’t single out any country specifically, the inference is aimed at some European Union’s measures including its carbon border-adjustment mechanism, or CBAM, and the US administration’s massive subsidy programs aimed at spurring production of computer chips and electric-vehicle batteries, people familiar with the matter said on condition of anonymity because the discussions were private.

The conversations highlight an emerging area of debate at the WTO’s 13th biennial ministerial meeting: Rich countries that have long wanted poorer ones to reduce subsidies and lower trade barriers are now being called out for their own governments’ efforts to invest in and protect domestic industry.

‘Deep Concern’

According to the draft statement, members “express deep concern about the increase in unilateral and protectionist measures, which run counter to the spirit and rules of the WTO and the purposes and principles of the United Nations.” Among the concerns stated are measures taken that “impact negatively on the access of developing countries’ exports to global markets.”

Some developing nations are growing more concerned about the risk of a new competition with wealthy nations to attract investments and support companies to accelerate the development of clean technologies — areas currently being fueled by the US, China and the European Union. Meanwhile, they face new regulatory barriers in the shape of sustainability laws.

Brazil’s foreign trade secretary Tatiana Prazeres warned of the consequences of the subsidy rivalry, because it could force less-wealthy countries to propose remedies to avert the negative effects in their economies. For that reason, she called for a “serious conversation” in the WTO to address this issue.

“I don’t know the end result of this conversation, but we cannot just pretend it is not there,” Prazeres said during a panel discussion.

Canadian Trade Minister Mary Ng said that WTO members this week discussed subsidies in an initiative chaired by Canada and Costa Rica that has a working group focused on the topic. It seeks to better understand the relationship between trade and the environment, the role that subsidies are playing, and what an official negotiation over those issues at the WTO would look like if it were to be launched, she said in an interview.

The talks are about “how trade can be a can be part of the solution to address climate change and the environment,” she said in an interview on Wednesday. With subsidies, it’s “an understanding of who might be doing what, and who might need what,” she said.