With the climate emergency deepening and government responses falling short, time is running out. As the United Nation’s Intergovernmental Panel on Climate Change warned in its recent report, the situation is dire with unprecedented, fast-moving climate change already driving devastating human and ecological impacts. Significant action by governments as well as by the private sector is necessary if we are to avoid catastrophe. At a minimum, meeting the goals of the Paris Climate Agreement is a critical step.
Unfortunately, the Paris Agreement is not self-enforcing, and the commitments of the signatory governments are voluntary. As countries dither about climate action, many continue to negotiate and enter into free trade agreements (FTAs). In contrast to the Paris Agreement and many other international environmental commitments, FTAs and World Trade Organization (WTO) rules can be enforceable, with dispute settlement mechanisms and the possibility of penalties, including tariffs on goods from offending countries. The disconnect between enforceable trade rules and unenforceable environmental commitments has opened the door to corporations offshoring polluting industries to avoid the costs of the climate transition, and conflicts between trade rules and measures to effectively reduce climate-altering emissions.
Pundits and policymakers alike are now asking whether trade agreements can be made compatible with climate commitments, or even promote positive environmental outcomes. Some politicians claim that recent trade agreements already advance climate solutions. Is there anything to these claims, or is this just another case of greenwashing or wishful thinking? In our new Policy Brief, we break down recent EU and U.S. trade agreements and government claims that reforms and sustainability provisions are meaningful. We conclude that EU and U.S. trade agreements fall well short of effectively promoting climate action — indeed, they contribute to global warming by expanding global trade and limiting government policy options. We outline the most promising of emerging trade rule reforms, review recent legal and policy analysis from think tanks and academics, and offer suggestions for future action to better align trade policy with global environmental goals.