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Trade can Play a Significant Role in Tackling Climate Change: UN Report

Armida Salsiah Alisjahbana, the United Nations Under-Secretary General and the Executive Secretary of ESCAP

By Joyce Mukucha

The new report by United Nations has underscored an urgent need for economies in the Asia-Pacific region to reduce greenhouse gas (GHG) emissions, including to maintain their trade competitiveness as carbon taxes at borders threaten to rise.

The Asia-Pacific Trade and Investment Report 2021 was jointly launched on Monday by the UN Economic and Social Commission for Asia and the Pacific (ESCAP), the United Nations Conference on Trade and Development (UNCTAD), and the UN Environment Programme (UNEP).

This is the first report to examine the impact of upcoming border carbon adjustment mechanisms affecting economies in the Asia-Pacific region.

It highlighted that trade can help countries adapt to higher average temperatures and more extreme weather events by offering consumers lower-emissions goods and services and facilitating the use of climate-friendly technology.

According to the report, around 16 million new jobs could be created in clean energy, energy efficiency, engineering, manufacturing, and construction industries in the Asia-Pacific region, more than compensating for the estimated loss of five million jobs by downscaling industries.

“The Asia-Pacific region is now the largest emitter of GHGs in absolute terms. However, the Asia-Pacific Trade and Investment Report 2021 (APTIR) reveals significant room for all economies in the region to make their trade and investment more climate-smart,” said ESCAP in a statement.

Launching the report, Armida Salsiah Alisjahbana, the Nations Under-Secretary-General and the Executive Secretary of ESCAP said as key trade partners consider putting border taxes in place on carbon, there are strong concerns on the effects on the developing countries since many economies in the region are at risk of being pushed out of key markets.

She added that “The roll-out of COVID-19 recovery packages could provide opportunities to invest in low-carbon technologies and sectors; opportunities that should not be missed considering the urgency for action.”

The report also pointed out that barriers to trade in environmental goods are more prevalent than barriers to trade in carbon-intensive fossil fuels highlighting that wasteful and regressive fossil fuel subsidies also continue to contribute to GHG emissions in the region.

According to the report, their timely abolishment and replacement with more targeted support policies could provide much-needed finance for social and environmental policies in addition to reducing emissions.

In a message to the report launch event, Tipu Munshi, Honourable Minister of Commerce, Bangladesh, said: “To me, the recommendations in the report, like trade liberalization in climate-smart and other environmental goods, phasing out of fossil-fuel subsidies, private sector initiatives, transition to climate-friendly transportation, incorporation of climate issues in RTAs, carbon pricing and carbon border adjustment taxes are very much befitting given the crises we are facing.”

A joint message from Hon Damien O’Connor, New Zealand’s Minister for Trade and Export Growth, and Hon James Shaw, New Zealand’s Minister of Climate Change emphasized that: “One of the most substantial roadblocks in the way of cutting emissions is fossil fuel subsidies. Subsidies are a trade issue. Trade laws can be a vehicle for driving action on climate change.”

Executive Director of the UNEP, Inger Andersen, said getting trade right was critical to overcoming the triple planetary crisis of climate change, biodiversity loss, and pollution and waste.

“As we seek to make net-zero a reality, each and every sector of our economy must embark on immediate and deep emissions cuts. Climate-smart trade is a powerful tool in the solution toolbox to mitigate the impacts of the climate emergency, and in ensuring those most impacted, are not left behind”, said Andersen.

The Secretary-General of the UNCTAD, Rebeca Grynspan, pointed out that the links between trade, investment and climate change are complex.

“The key is to ensure that the positive effects of trade and investment are maximized, such as by promoting trade and investment in renewable energy and low-carbon technologies, while minimizing the adverse effects, like by digitalizing trade and transport systems,” she said.

It has been also highlighted by the report that climate pledges by several countries in the Asia-Pacific region need to be underpinned by policies and measures to drive the transformation towards lower carbon economies, including in the private sector.

The report revealed that climate-smart policies have a significant cost, particularly for carbon-intensive sectors and economies, but the cost of inaction is far greater. Some estimates are as high as $792 trillion by 2100 if the Paris Agreement targets are not met.

Regional trade agreements, the report underscored, can also help address the climate crisis pointing out that to a general trend towards including a higher number of environmental provisions in regional trade agreements, broadening their scope and deepening their stringency.

This is the first time an index, the Climate-smart Trade, and Investment Index (SMARTII) – was constructed to evaluate the degree to which economies in the region had climate-smart trade and investment policies.

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Byron Adonis Mutingwende