Dirty Trade is Subsidized, so Global Carbon Prices are Needed: WTO (1)

Summary of section in WTO report:

The key to tackling climate change is to enable trade in environmentally friendly goods and services, while limiting the negative impact of trade and trade barriers, according to the World Trade Organization.

In most countries the import tariffs and non-tariff barriers are substantially lower for “dirty” industries that emit larger amounts of CO2 per output than cleaner industries do, the WTO said in a report — see below.

“This difference in trade policy creates an implicit subsidy to carbon emissions and contributes to climate change.

“Governments and international organizations are working to mitigate the carbon emissions in
transport to ensure a transition to sustainable mobility.

“It is estimated that further trade-opening in environmental goods and services would contribute to the reduction of GHG emissions.”

Cutting emissions will require government policies, such as carbon-pricing systems, to shift the costs of climate change being suffered by everyone to the private sector that’s mostly responsible for GHG emissions, the WTO said.

Carbon-pricing can take different forms such as cap-and-trade emissions trading systems
(ETS), which allow industries to trade their carbon emission allowances, or carbon taxes consisting of a notional tax rate on GHG emissions.

“Other complementary policies, such as land and forest management, emission regulations and standards, investment in research and development (R&D) for green technology and financial devices to incentivize the adoption of low-carbon technologies,
are needed to help countries mitigate climate change at a more rapid pace.

“Given the global nature of GHG emissions, international cooperation is sorely needed to mitigate climate change in the long term and to create a harmonized global carbon price to avoid carbon leakage.”

CarrZee added emphasis.

Nov. 2021 report — See page 70 for research citations: https://www.wto.org/english/res_e/booksp_e/wtr21_e/00_wtr21_e.pdf

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