Executive summary Since 2008, the global economy lived through and slowly recovered from a major financial and economic crisis, with trade failing to regain its momentum. Multiple threats to the global environment were brought into sharper focus by growing evidence of the climate crisis and the deterioration of ecosystems and biodiversity. These threats highlighted the need for more ambitious sustainable strategies, with a new sense of urgency for collective action increasing pressure to reconcile trade and environmental priorities. Multilateral frameworks such as the Sustainable Development Goals (SDGs) and the Paris Climate Agreement dominated the environmental agenda, influencing decisions across many other policy areas, including trade. On the trade side, there was limited progress in multilateral negotiations, but significant advances in regional approaches, as well as notable plurilateral initiatives relevant to the trade and environment nexus. With these considerable changes, taking stock of the OECD’s recent work on trade and environment is not only timely, but also essential to help inform the direction of future trade and environment work at OECD. This retrospective report, which follows up on an earlier report covering the 1991-2008 period (Potier and Tébar Less, 2008[1]), has a dual aim. First, it reviews the OECD’s contribution to advancing policy analysis on trade and the environment between 2008 and 2020, focussing primarily on the work carried out by the Joint Working Party on Trade and Environment (JWPTE) on four topics: (i) Multilateral and plurilateral trade agreements and environmental policies, (ii) Regional Trade Agreements and the environment, (iii), Global environmental issues, policy responses, and their linkages with trade, and (iv) Mutually supportive trade and environment policies, with a focus on indicators and quantitative analyses. Other relevant work on trade and environment at the OECD is also highlighted. Second, the report explores emerging trade and environment issues and potential drivers for future trade and environment work to ensure it remains as relevant in the future as it has been in the past.
MULTILATERAL AND PLURILATERAL TRADE AGREEMENTS AND ENVIRONMENTAL POLICIES Many of the issues the JWPTE explored in the early 2000s in support of WTO discussions remain topical and the OECD has continued to provide valuable insights into areas central to multilateral and plurilateral trade and environment issues, notably environmental goods and services (EGS), and the reform of government support.
The JWPTE’s seminal work on an EGS classification started in 1999, followed by the widely used Combined List of Environmental Goods in 2014 and an innovative taxonomy of environmental services in 2017. These advances made it possible to analyse the benefits of and barriers to EGS trade, and study tools to ensure these trade flows contribute to meeting environmental objectives. A parallel strand of work has considered how environmental regulations and support for renewables and electric vehicles interact with trade. A major finding of this work is the positive impact of environmental regulations on trade in EGS, revealing broad areas of compatibility between trade and environmental objectives. It also found that support for environmental goods and services that intends to ensure a large share of demand is met by domestic suppliers is counterproductive because it tends to push up prices for these goods and services. The OECD is also contributing to tracking progress towards the reform of inefficient and environmentally harmful fossil fuel support which has been regularly pledged at international level since 2009, notably in the framework of the G20 and APEC. The OECD inventory of fossil fuel support launched in 2010 had by 2020 been extended to 44 countries and over 800 subsidy measures to producers and consumers. This uniquely comprehensive inventory is widely recognised as an essential tool in efforts to reform fossil fuel subsidies. It has led to interesting findings about the impact of fossil fuels support on renewable energy uptake, and on trade and competitiveness issues for environmental goods and services. OECD WORK ON TRADE AND THE ENVIRONMENT: A RETROSPECTIVE, 2008-2020 . 7
