Green economy and impact on trade

The RIO+20 Conference organised by the United Nations Conference on Environment and Development, marking its 20th anniversary, will take place in Rio de Janeiro in June 2012.

The conference’s objective is to secure renewed commitment for sustainable development and meet new and emerging challenges by focusing on two themes: the green economy in the context of sustainable development and poverty eradication; and the institutional framework for sustainable development.

It is envisaged as a conference at the highest possible level with the presence of Heads of Governments and is expected to result in a focused political document. Preparatory regional meetings are being held in the different regions these days. The preparatory meeting for the Asia and Pacific Region took place in October in Seoul, Korea.

No agreement on concept

Although the term ‘green economy’ is in fashionable usage across the world today, the recent regional meetings showed that the participants have been struggling to find agreement on the concept of a ‘green economy’. While some see a redefinition of the economy in green terms as a path towards sustainable development, others fear the concept is synonymous with trade protectionism and conditionalities to the point where participants at one regional meeting chose not to mention the green economy in their meeting conclusions.

Many delegations wanted clear answers on the definition of the ‘green economy’ before making any commitments on behalf their delegations. This was largely blamed on a lack of an internationally-agreed definition of the term ‘green economy’.

Impact on trade

What most delegations fear about the definition is the impact on trade of what is referred to as green economy. At all the preparatory meetings at regional level, it was reported that there was across-the-board insistence that the transition to a green economy must rule out any possible restriction to international trade.

There is fear across the globe as was seen by the response at the regional level preparatory meetings whether the green economy could potentially be used to justify the imposition of trade conditionalities on the basis of environmental standards as well as protectionist measures by countries to protect and insulate their own green industries.

Some delegates had specifically questioned how complementary previously-stated development goals under the WTO’s Doha Round of trade talks – especially with regard to special and differential treatment for developing economies – are with the implementation of the green economy.

Recommendations

The Arab preparatory meeting made a series of recommendations on the green economy calling for a clear definition – one that should not substitute sustainable development. At the same meeting, delegates agreed on what should not be the ‘green economy’.

These included, in particular, not allowing the green economy to become a means to limit the right of developing countries to utilise their natural resources, nor as a tool to exempt developed countries from their commitments to their developing country partners.

Although the participants at the Asia and the Pacific meeting were reported to be more supportive of the green economy than the participants at the other regional meetings, many delegations are reported to have expressed concerns regarding potential restrictions and conditionalities due to the export interest of their countries.

Linkages between trade and green economy

An interesting side event dedicated to the subject of trade and the green economy is reported to have taken place at the African regional meeting where they also looked more in depth at the linkages between trade and the green economy.

Participants had examined the challenges and opportunities related to the green economy in the African context hearing both from economists and exporters who have developed green products.

Significant opportunities had been highlighted for African countries in a green economy such as exports of organic agricultural products, forestry and other certified products. However, they had also cautioned that measures such as green economy should be time bound and implemented according to WTO rules.

Participants had stressed that one of the biggest challenges for Africa would be to move away from exporting raw materials and moving up the value chain in a sustainable manner. Such challenges are not limited to Africa alone, but many developing countries including Sri Lanka.

The penultimate Intersessional Meeting of the UNCSD will take place on 15-16 December in New York after the European region preparatory meeting in December and before the final Preparatory Committee Meeting in May 2012.

Rio 2012

With the Rio 2012 meeting coming up less than a year after the WTO Public Forum, the aim of this session is to generate a broader and deeper understanding of green economy issues as they relate to trade. The session will be part of a consultative process on trade and the green economy in the lead-up to Rio 2012 and will focus on presenting new perspectives and exploring potential ways forward. The preparatory process for Rio 2012 has met with obstacles due to anxiety or unease among some parties with regard to the green economy concept, specifically due to trade-related concerns and fears of green protectionism. These issues merit more nuanced exploration, and would strongly benefit from input from the trade community, as the debate so far has been limited mainly to the environment community. Topics for the session will comprise: the role of subsidies in greening key sectors, including sustainable energy; greening Aid for Trade; and the evolving nature of intellectual property, technology transfer and innovation with regard to environmental technologies.

Key importance

Forging coherence between wider issues of trade, sustainable development and the nexus between trade and sustainable development governance will be of key importance to the future of the trade system, and will also present a challenge to it. By seeking ways to better understand the linkages between trade and the sustainability issues to be addressed at the Rio 2012 Conference, this session is expected to contribute to that objective. Whatever the final definition of ‘green economy’ would be, if it is interpreted by importing countries to increase protectionist measures, it would impact on Sri Lankan exports to the world too. Therefore, it would be necessary to keep track of developments with regard to the Rio 2012 Conference.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)