ADBI Working Paper Series
TRADE AND SDG 13 –
ACTION ON CLIMATE CHANGE
Andrew Prag
No. 735
May 2017
Asian Development Bank Institute
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Suggested citation:
Prag, A. 2017. Trade and SDG 13 – Action on Climate Change. ADBI Working Paper 735.
Tokyo: Asian Development Bank Institute. Available: https://adb/publications/trade-
and-sdg-13-action-climate-change
Please contact the author for information about this paper.
Email: Andrew.PRAG@oecd
Andrew Prag is environmental policy analyst at the Organisation for Economic Co-
operation and Development (OECD) in Paris.
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ADBI Working Paper 735 A. Prag
Abstract
This paper assesses the interaction of international trade with climate policies, and the
influence of trade on the implementation of SDG 13 (climate change). Although international
trade contributes directly to GHG emissions, increased trade can help to achieve
development goals in a GHG-efficient manner, provided that GHG emissions are correctly
priced everywhere. Given that emissions are not universally priced, the paper examines
where policies related to trade may be misaligned with or otherwise hindering climate
change objectives. While concluding that the multilateral agreements of the World Trade
Organization do not generally prevent governments from pursuing strong domestic climate
policy, the chapter does identify potential misalignments. These include import tariffs on
environmental goods, barriers to trade in services and domestic policies designed to support
local low-carbon industry but which are restrictive of international trade and therefore
potentially counter-productive. The paper concludes by stressing the importance of building
up resilience in the global trade system in the face of increasingly frequent and severe
weather-related shocks.
Keywords: climate change, trade, sustainable development
JEL Classification: F18, Q54
ADBI Working Paper 735 A. Prag
Contents
1. INTRODUCTION ... 1
2. TRADE AND GHG EMISSIONS ..... 1
3. POTENTIAL MISALIGNMENTS WITH INTERNATIONAL TRADE RULES ... 4
3.1 Multilateral Agreements under the WorldTrade Organization .......... 5
3.2 Regional Trade Agreements6
3.3 Environmental Goods Trade Liberalisation ... 6
4. MISALIGNMENTS ARISING THROUGH DOMESTIC POLICIES RELATED
TO TRADE7
4.1 “Local-content Requirements” for Renewable Energy ........... 7
5. BARRIERS TO TRADE IN SERVICES........ 9
6. RESILIENCE OF THE MODERN TRADE SYSTEM TO CLIMATE CHANGE .......... 11
REFERENCES ... 12
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