【English Training】Green Economy and Trade

Poll [民意调查]

We start out each lesson with a quick poll to learn about what you and your peers【同龄人】 think of the topics discussed throughout the course【贯穿整个课程】. The poll is voluntarily and anonymous【自愿且匿名】, and there is no right or wrong【没有对错】. No pre-existing knowledge is required.

Here is the question for this lesson:

Observers and practitioners have different views on whether trade has overall positive or negative impacts on the environment. In your view, what balance should countries strike when adopting trade policies?

• Trade is vital for creating jobs and alleviating poverty. These take precedence over environmental concerns.
• While environmental impacts are important, the positive impacts of trade outweigh these.
• Both trade and the environment are equally important. Policy should seek to balance impacts on both.
• Environmental impacts will affect trade flows and should therefore be prioritized in policy design.
• The climate crisis is the greatest challenge facing humanity today. Trade should therefore actively promote environmental objectives.

Traded goods and services make up roughly a third the world's gross domestic product. Trade can be a powerful lever for countries to develop their economies and lift people out of poverty.【贫困】 However, trade is also closely linked with the environment, and as such can have significant adverse effects【严重的负面影响】 on it. In view of【鉴于，考虑到】 the considerable【相当大的，较大幅度的】 growth of trade globally in recent decades【近几十年来】, it is vital to integrate【将...融入】 environmental considerations【注意事项】 into trade policies and practices to reach a more balanced【和谐的，平衡的】 outcome【结果】 for society. 

In this lesson, we will explore【探索】:

• How trade and the environment are interrelated【相互关联的】
• How trade and environmental governance【环境治理】 have evolved【演变】
• The transition to an inclusive【包容的】 green economy

Introduction

The relationship between trade and the environment is complex and multifaceted【包罗万象的】. In simple terms【简言之】, trade significantly affects the environment. At the same time, regulations【条例，规章制度】 to protect the environment shape the composition and practice of trade【贸易的组成和实际操作】.

So far so good【到目前为止，一切顺利】, but do trade and environmental protection have conflicting goals?

Common impacts of trade

First, let’s explore the impacts that trade can have both in economic, social and environmental terms【条款】.

【prioritize ：v. 优先考虑
reduction : n. 减少
thanks to : 由于，幸亏
facilitate : 促进，推动

infinite ：无穷大的
footprint : 足迹，脚步】 

Both ministers make valid points. A balance must be achieved between competing ends. Trade can mean more economic activity and income that are necessary for development, but its effect on the environment needs to be considered as well.

So, how do we balance trade and the environment? 

Factors determining environmental and social footprints

 Balancing economic development and environmental protection is often a delicate undertaking【微妙的工作】, because environmental and social footprints vary depending on a number of different factors, such as:
  - what is traded, i.e. the types of goods and services
  - How it is tarded, i.e. the terms and processes
  - How goods and services are produced
  - How benefits are distributed
  - How the waste is managed

Importantly, all these aspects depend on the specific rules and policies that shape the trade and environment interface.

How does environmental regulation【环境监管】 affect trade then?

By regulationg access to markes for certain products

By increasing the cost of certain types of production processes

Through these three and other channels, environmental protection also affects employment, innovation and development.

In the next two lessons, we take a look at how trade and environmental governance evolved over time. We’ll also see what role an inclusive green economy can play in the context of sustainable development.

How trade shapes the global economy

Since 1980, the financial volume of global trade has multiplied by a factor of five to a value of US$ 18.89 trillion in 2019 (WTO 2020).

Global trend of expanding trade

Two important aspects of the global trend of expanding trade are its relationship with:

1、Economic growth          2、Global Value Chains (GVCs)

It's not only about global wealth distribution; inequality measures suggest that income is unevenly distributed too, meaning that the wealthy continue to add to their fortunes. Take a look at the chart below.

The rationale of the concept of GVCs is to ‘unbundle’ or disaggregate the stages of production of a given good or service and let countries and/or firms that have a comparative advantage specialize.
【全球价值链概念的基本原理是将特定商品或服务的生产阶段“拆分”或分解，让具有比较优势的国家和/或公司专业化。】

The stages of a GVC vary depending on the industry, but typically include the following segments:

Global value chains offer differing risk and reward profiles depending on a country's economic structure. Looking at least developed countries (LDCs) in particular, how could they benefit from global value chains?

LDCs face a number of consequences due to their contribution【贡献，作用】 to GVCs. 
For example, these countries have an increased vulnerability【脆弱性】 to a fall in commodity prices【大宗商品】.

We've looked at some of the impacts of trade. In order to understand efforts to mitigate【减轻，缓和】 the negative effects of trade, we need to consider the rules and policies that govern trade: How is trade governed internationally?

The current global trade regime rests on two major components. Let's take a look.【当前的全球贸易体制主要有两个组成部分。让我们来看看。】

Overall, the system seeks to advance two foundational principles:

• The principle of progressive liberalisation of trade

• The principle of non-discrimination among trade partners

But how did we get to these principles? There are at least two key milestones in international trade governance that shape today's landscape of rules and principles.

–

In 1947, the General Agreement on Tariffs and Trade (GATT) was adopted to regulate world trade. Signed by 23 countries, the GATT was intended to boost economic recovery after World War II through reconstructing and liberalizing global trade.

The countries agreed to enter into “reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce.”

                              

The GATT provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce.

It was refined over eight rounds of negotiations, leading to the creation of the World Trade Organization (WTO), which replaced GATT in 1995.

WTO

–

On 14 April 1994, 123 nations signed the Marrakesh Agreement, as part of the Uruguay Round Agreements. The Marrakesh Agreement led to the formation of the WTO in 1995.

The WTO incorporates the principles of the GATT and provides a more enduring institutional framework for implementing and extending them.

The Marrakesh Agreement establishing the WTO expressly identified, in its preamble, the objective of "expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment".

As basic needs such as food, heating, electricity or mobility will not disappear—yet rather will increase in line with forecasted population growth—the world needs to meet them through a fundamentally different approach.

How did the global community respond to environmental challenges over time?

Up until the 1990s, environmental concerns were marginal and mainly took the form of either nature conservation conventions or treaties managing biological resources. Over the years, the focus of international efforts has evolved.

The focus of international efforts has moved from recognition of the need to protect the environment, to reconciliation of environmental protection and socio-economic development, to the development of adequate environmental instruments, to—more recently—actual implementation of existing regulations. Let's take a look at the events that shaped these trends.

Recognition of the need to protect the environment

Stockholm Conference (1972)

The United Nations Conference on the Human Environment—also known as the Stockholm Conference—was the first major conference on international environmental issues, and marked a turning point in the development of international environmental politics. The Stockholm Declaration on Environment formulated during the Conference was designed to protect and improve the human environment.

Reconciliation of environmental protection and socio-economic development

Rio Conference (1992)

The Rio Conference on Environment and Development (Earth Summit) introduced the concept of sustainable development which integrated environmental protection and socio-economic development. This concept helped set the global green agenda. The Rio Conference raised public awareness of the need to integrate environmental protection and economic development.

Development of adequate environmental instruments

Rio+20 (2012)

At Rio+20, Heads of State and Government reaffirmed the need to transition to an inclusive green economy and highlighted the role that trade policy can play in this transition.

Actual implementation of existing regulations

Agenda 2030 (2015)

At the United Nations Sustainable Development Summit, the 2030 Agenda with its 17 Sustainable Development Goals (SDGs) was adopted. The 2030 Agenda is the basis for modern environmental governance, which focuses on effective implementation. The Sustainable Development Goals create a platform for all countries—developed and developing—to form a global partnership.

The transition to an inclusive green economy

The Rio+20 conference (2012) acknowledged the need to transition to an inclusive green economy and highlighted, in its outcome document "The Future We Want", the role that trade policy can play in this transition.

An Inclusive Green Economy has evolved from earlier work on Green Economy. In its simplest expression, such an economy is low carbon, efficient and clean in production, but also inclusive in consumption and outcomes, based on sharing, circularity, collaboration, solidarity, resilience, opportunity, and interdependence. It is focused on expanding options and choices for national economies, using targeted and appropriate fiscal and social protection policies, and backed up by strong institutions that are specifically geared to safeguarding social and ecological floors.
【包容性绿色经济是从早期的绿色经济工作发展而来的。简单来说，这种经济是低碳、高效和清洁的生产，但在消费和结果方面也是包容的，基于共享、循环、协作、团结、韧性、机遇和相互依赖。它的重点是扩大国民经济的选择和选择，使用有针对性和适当的财政和社会保护政策，并得到专门针对维护社会和生态底线的强有力机构的支持。】

Ecuador
In Ecuador, farmers produce certain nich products, such as aguardiente(a traditional drink) and traditionally fermented cocoa beans. Many farmers were illiterate and could not take advantage of export opportunities to enter organic and other certified markets. A network was formed to help them acquire certification and sell these certified niche products at a premium price to international companies. As a result, farmers benefit from stable prices, which are not subjected to fluctuations in the local commodity market.

Kenya
Kenya has been attracting renewable energy financing through the generation and export of carbon credit.
For example, the Mumias Sugar Company generates renewable energy through combustion of the biomass that is generated as waste of factory production. The company has entered into a ten-year agreement(2009 - 2019) with the Japanese Carbon Finance Company Limited (JFC),selling its carbon credits on a long-term basis and thereby generating significant revenue. This arrangement has the added benefit of avoiding methane emissions, which would result from landfilling the biomass.

–

The growth of trade has significant social effects (job creation, reduced poverty) and environmental effects (increased use of natural resources, higher pollution levels).

Trade is correlated with GDP growth, particularly for developing countries. Today, global trade is characterised by so-called global value chains (GVCs), which entail the unbundling of production processes into many different parts.

International trade is governed by a combination of:

1. A multilateral trade system with the World Trade Organization (WTO) at its core, which hosts a variety of multilateral and plurilateral trade agreements as well as a dispute settlement procedure
2. A complex web of bilateral and regional trade agreements between two or more countries that exist in parallel to the multilateral framework, and that usually go beyond WTO-related commitments 

Environmental Protection

–

Over the years, the focus of international efforts has moved from recognition of the need to protect the environment, to reconciliation of environmental protection and socio-economic development, to the development of adequate environmental instruments, to—more recently—actual implementation of existing regulation. The current focus of modern environmental governance is effective implementation, particularly of the 2030 Agenda for Sustainable Development and its SDGs.

Inclusive Green Economy (IGE)

–

The Inclusive Green Economy concept is a tool to achieve sustainable development, with an emphasis on the opportunities arising from the transition from a fossil fuel dependent, resource intensive, inequitable economy to an efficient and clean one.

The IGE expands options for national economies by using targeted and appropriate fiscal and social protection policies, and backed up by strong institutions that are specifically geared to safeguarding social and ecological floors.

Many opportunities arising from the transition to an IGE rely on trade. Trade policy, if appropriately used, can be a powerful tool to promote the transition to an IGE. For example, by enhancing competitiveness and innovation, and facilitating access to environmental goods and services, such as renewable energy or pollution control equipment, trade can decrease environmental deterioration.