Green Trade: UK Board of Trade
- Jul 22, 2021 4:18 pm GMT
Executive Summary This second report by the Board of Trade sets out the economic case for green trade and the opportunity for Global Britain to accelerate the global green transition by promoting free and fair green trade.
There are 7 key points to draw from this Board of Trade paper:
1. Climate change and nature loss require swift global action – including through green trade. • Natural disasters have already caused $3 trillion of damage this century. $44 trillion of economic value is highly or moderately dependent on nature and exposed to nature loss. Global GDP could be 10% smaller by 2050 if temperatures rise to 2.6OC above pre-industrial levels versus a Paris-aligned world. • Action through trade can both help safeguard the environment and ensure the global trading system is able to withstand the shocks and shifts it may face due to environmental degradation.
2. The UK is well-placed to bring together the trade and environmental agendas as a global leader on decarbonisation and a champion for free trade. • Since 1990, the UK has reduced its greenhouse gas emissions by 44% – faster than any other G20 economy – and has committed to protecting 30% of UK land by 2030 to support the recovery of nature. The UK is also a bastion of free trade and has significant industrial strengths – plus a burgeoning green finance sector – to help speed the global transition.
3. Green trade presents major opportunities for the UK economy: driving sustainable growth, building the UK’s green industrial base, and securing more green jobs. • The UK can spearhead the global green transition by developing innovative green technologies to export to the world and by doubling down on its success as a global hub for green finance. • The economic opportunities are significant – $30 trillion of global investment funds are already invested in sustainable assets – having doubled in just 4 years. The UK’s low carbon economy could grow by 11% per year and the global export market for low-carbon products could be worth up to £1.8 trillion by 2030. By 2050, there could be more than 1.2 million full time workers directly employed in England alone. 1 Data sources for all figures provided in the Executive Summary are included in the main body of the report. $3tn Global losses from natural disasters 2000-2019 Global GDP in a +2.6 -10% oC world versus a Paris aligned world £1.8tn Size of global market for low-carbon exports by 2030 $44tn Economic value that is highly or moderately dependent on nature $30tn Funds held in sustainable investment assets globally Projected growth of the 11% low-carbon UK economy per year: 2015-30 +1.2m Low carbon jobs across the UK by 2050 6 GREEN TRADE, JULY 2021
4. The UK is already using its independent trade policy to encourage environmental action overseas by promoting green trade that is both free and fair. • Free trade helps spread green technologies around the world and speed the global transition. The UK has already used its new independent trade policy to reduce barriers to trade in environmental goods and services, including through the UK Global Tarif, which removed tariffs on over 100 green goods. • Market failures and distortions - such as industrial subsidies – can incentivise unsustainable consumption, warp trade fows and damage the environment. The UK is already working to address these unfair trade practices, including by championing the case for reform of fisheries subsidies at the WTO. The UK Government has also announced a world-leading policy to end government support for the fossil fuels energy sector overseas. The Board of Trade wants the UK to build on this existing activity and foster trade policy that protects the environment in three key areas:
5. The UK should use its Global Britain platform to encourage international ambition on green trade. The UK should shape the 21st century international trading system by: • Using its convening power and role at the G7, G20 and MC12 to emphasise how trade can impact on climate and the environment. • Being a leading voice in multilateral and plurilateral fora, including via its membership of the Structured Discussions on Trade and Environmental Sustainability (TESSD) at the WTO, to reframe the narrative on trade and the environment and build consensus for reform.
6. Free trade: The UK should advocate for making green trade freer. The UK should consider all options for advancing environmental goods and services liberalisation by: • Using its membership of TESSD to re-launch discussions on the Environmental Goods Agreement. • Helping shape green policies as part of the Government Procurement Agreement at the WTO, so that government levers are used to increase the use of green products and services • Seeking ‘best in class’ free trade agreements (FTAs), based on liberal green trade principles, that create a platform for collaboration and safeguard the UK’s right to regulate.
7. Fair trade: The UK should advocate for making green trade fairer. The UK should make astute use of its trade levers to tackle environmentally damaging market distortions by: • Deploying its diplomatic and/or regulatory diplomacy tools as a priority to encourage environmental action alongside considering proportionate use of trade policy. • Deploying its trade levers where evidence points to a clear need for action and in a manner that is consistent with the UK’s international obligations • Developing trade policy solutions (if required) that draw in large numbers of countries, ideally developed at the multilateral or plurilateral level. • Using bilateral trade levers – including FTAs – to safeguard the UK’s existing environmental standards, promote sustainable trade and, where possible, to raise environmental standards • Pursuing unilateral action in limited circumstances, in a way that ensures trade remains fair. • Steering the global debate on carbon leakage, by applying the above policy approach in practice
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