UNCTAD Informal Briefing on Climate Change, SDGs and Trade:
At the Crossroads of Sustainable Development
10 February 2015, Palais des Nations, Geneva, 10:00-13:00
INFORMAL SUMMARY OF THE DELIBERATIONS
BY THE UNCTAD SECRETARIAT
UNCTAD/WEB/DITC/TED/2015/1
This document has been reproduced without formal editing
Over 150 stakeholders took part in the briefing, organized by UNCTAD and
facilitated by panellists from UNCTAD, UNFCCC Secretariat, WTO Secretariat,
International Institute for Sustainable Development, European Commission, South
Centre, McKinsey and Company, and Pacific Island Countries’ Delegation to WTO
(see attached agenda). Mr. Guillermo Valles, Director, Division of International Trade
in Goods and Services, and Commodities, UNCTAD, moderated the briefing.
Participants and panellists expressed appreciation to UNCTAD for the
initiative to compare notes, identify main threads and missing vessels/links between
major global initiatives unfolding in 2015. They found the deliberations to be
stimulating, enlightening and encouraging. It was especially timely and important to
probe and highlight the challenges and opportunities in the intensification of
discussions and negotiations in international forums taking place in coming months to
put together the final shape of outcomes/agreements that would shape the
international development agenda and paradigm in the coming decades. The informal
dialogue provided a useful platform to discuss the interconnections between the
respective global negotiations in support of a coherent development agenda.
Participants requested UNCTAD to conduct similar briefings in the period ahead.
A: The Context: Big Opportunities and Big Risks in 2015
2015 marks a significant year for the development agenda with several
important milestones on the horizon. Major global negotiations presently underway
will take final shape in 2015 and possibly result in outcomes that are legally and
contractually binding in some cases (hard law), and/or in aspirational goals, principles
or best endeavour codes and practices (soft law) in other cases. Five such processes
are: (1) the Financing for Development Conference arising from the Monterrey
Consensus; (2) the post-2015 development agenda arising from the expiry of the UN
Millennium Development Goal in 2015, which is intertwined with the Sustainable
Development Goals (SDGs) based on the outcome of the Rio+20 Conference; (3) a
new Climate Change agreement from the UNFCCC process; and (4) the scaling-up of
the WTO Doha Development Agenda negotiations. In addition to these, the first
international conference in 2016 that would focus on the implementation of resulting
outcomes would be UNCTAD XIV in Lima.
These unfolding global negotiations present big opportunities and big risks.
The opportunity manifests in the confluence of negotiations in 2015 that could
coalesce into a significant outcome in terms of universal goals and commitments for
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inclusive and sustainable development. Much has been achieved in the past decades,
including under the framework of the UN Millennium Development Goals (MDGs).
But achieving human development and a life of dignity without poverty remains a
global and local challenge. Most countries and stakeholders are committed to
attaining robust outcomes in the different negotiations. It is recognized that the world
is changing and the development goals being shaped, such as SDGs, are going to be
global and will involve all countries. Going alone is not an option when confronting
the complex global challenges.
Moreover, not reaching outcomes in the global negotiations is also not an
option. It would be a disappointing setback for all. For some, like Pacific Islands
States for example, the global agenda is not just an economic, social and
environmental consideration but also an existential one of life and death, especially as
regards climate change and global warming. Pacific Leaders have identified climate
change as the single most important challenge facing their countries as it undermines
their efforts to attain sustainable development. A recent Asian Development Bank
report estimated that Papua New Guinea, the largest island and economy among the
Pacific Islands States, would suffer from climate change effects a loss of up to 15% of
GDP by 2100. The impact would be greater for the other small island States.
Outcomes in the global negotiations are thus required to arrest such disastrous effects.
The challenge is that the outcomes should be robust enough to bring about real
and lasting results in overall human development. Development is the top priority for
developing countries for example. But, it must be recognized, there are underlining
tensions that stifle some countries from taking more ambitious stands. For example,
some LDCs, like Sierra Leone, are committed to universal goals of sustainable
development. The dilemma they face is exemplified in the area of energy where they
would need to reduce the use of fossil fuel and increase the use of renewable energies.
However the latter can be more expensive which can increase the vulnerability of
their already weak economies by undermining competitiveness. Special and
differential treatment must be provided to LDCs to access renewable energy,
including easy access to funding sources. Creativity is needed to assist developing
countries in accessing technologies that can help to access renewable energies and
linking the cost of doing so with the cost of climate change rather than the cost of
fossil fuels.
On the other hand, some countries’ commitments are not ambitious. It was
noted, for example, that targets on reducing GHG emissions in limiting global
temperature increase to 2°C (relative to pre-industrial levels) as called for in the
Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)
should be in the range of 80-95% for industrialised countries by 2050. Past
experiences with global negotiations in climate change, trade and global development
goals have also had disappointing (or lack of) results that has affected their ambition
and implementation. Given however that the stakes are high and the choices faced are
stark, strong and decisive leadership and wisdom must be displayed to confront the
complex global challenges, find common grounds and move forward together.
The outcomes should also include vigorous follow-up implementation and
accountability frameworks. Accountability framework such as the proposed the High
Level Political Forum for reviewing progress in implementing the SDGs should have
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both positive aspects (rewarding countries for meeting their commitments) and
negative aspects (chastising countries that are faltering). As regards implementation,
the importance of supportive complementary frameworks cannot be overemphasized
such as adequate financial resources (domestic and international including FDI),
technology transfer, capacity building, aid for trade etc.
The sequencing of the global negotiations is also important. The FfD
Conference will take place in Addis Ababa in July; the post-2015 development
agenda is to be adopted by a UN Summit in New York in September; a new climate
agreement is to be adopted by COP21 of UNFCCC in Paris in November-December;
and the WTO Ministerial Conference in Nairobi in December. A positive and robust
outcome to the FfD conference will set the basis and create a positive environment for
having better SDGs, which could in turn improve the environment for a climate
agreement and for the WTO Doha agenda.
The fact that the global negotiations are sequenced to be concluded at different
times and in different places, but are being conducted in parallel with limited or no
linkages is a major challenge in terms of fashioning a common, coherent and
impactful development agenda. It was noted for example that international trade was
not visibly discussed in the post-2015 development agenda process and climate
change negotiations. It is thus highly important to build bridges between different
policy dialogues on climate change, sustainable development and trade, to ensure a
systematic, coherent and effective approach.
It was stressed that the time for taking actions has arrived so the international
community needs to move from debate into actions. A failure to do so in the
negotiations by coming up with robust results, including follow-up implementation
and accountability frameworks, would be a failure by the international community in
its duty to foster a new development agenda and save the world for the present and
future generations. It would cast a shadow over efforts to build a better world for all.
B: Some of the Key Issues Today
Some of the key issues being negotiated in the different negotiating forums in
run-up to the concluding meetings of their governing frameworks were highlighted.
Post-2015 Development Agenda and SDGs
The United Nations Summit planned for 25-27 September in New York will
adopted the new post-2015 development agenda including sustainable development
goals. Based on the Rio+20 outcome on SDGs, work undertaken by the Open
Working Group of the UN General Assembly resulted in the formulation of 17 SDGs
with 169 associated specific targets. The UN General Assembly endorsed the
proposals of the OWG. Unlike the MDGs that were focused on the social dimension
of development, the SDGs include significant aspects of the economic and
environmental dimensions of sustainable development. It provides a more balanced
treatment of all three pillars of sustainable development. The key issues of social,
economic and environmental development being addressed in the post 2015 agenda
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are encapsulated in an integrated set of six essential elements identified in the UN
SG's synthesis report namely:
1. Dignity: to end poverty and fight inequalities;
2. People: to ensure heathy lives, knowledge and the inclusion of women
and children;
3. Prosperity: to grow a strong, inclusive, and transformative economy;
4. Planet: to protect our ecosystem for all societies and our children;
5. Justice: to promote safe and peaceful societies and strong institutions;
6. Partnership: to catalyse global solidarity for sustainable development.
The forthcoming UN Summit could craft the preamble to the goals, which
would identify the board vision and principles on which the goals are based. These
would be as important as the goals themselves. Such vision and principles could draw
upon, inter alia, the UN Secretary-General's synthesis report namely "Road to dignity
by 2030: ending poverty, transforming all lives and protecting the planet" and the
work of the Intergovernmental Group of Experts on Sustainable Development
Financing. The work of the latter would also feed into the Financing for Development
Conference in Addis Ababa (13-16 July) to generate ideas and solutions on financing
development in the post-2015 period from domestic and international sources, and
from the public and private sector.
New Climate Agreement
The COP of UNFCCC are working towards adopting a meaningful agreement
on climate change at the end of this year in Paris from 30 November to 11 December
which will be implemented from 2020, setting the world on a course to limiting the
global temperature to 2 degrees Celsius. COP 21 in Paris is not intended to be the end
of a journey, but rather a major milestone in charting a course that can be followed by
governments and businesses towards an orderly planned transition over time to a low
carbon society. Its conclusion is thus a stepping-stone towards building climate
resilient societies and economies. The road to Paris has been paved by several
decisions over the years including the Cancun Conference in 2010, the Durban
Conference in 2011, and the Lima Conference in 2014 dealing with aspects of the
pillars of climate change namely mitigation, adaptation, finance, technology and
capacity building. In addition, the UN Secretary General convened a Climate Summit
in September 2014 in New York, which rallied support among leaders for a
conclusive outcome on climate change.
The climate change negotiations are very complex and intense, with linkages to
other negotiations as well. Parties are grappling with several issues as they work
towards an agreement in Paris that would set the framework for climate policy in the
period ahead and foster the transition to climate friendly growth paths. Parties are
striving for an effective agreement. Some of the key issues on the table include:
a. Differentiation: Whether and how the principle of common but differentiated
responsibilities should be included in the 2015 agreement and in regards to
INDCs (Intended Nationally Determined Contributions).
b. Legal parity between mitigation and adaptation as well as between mitigation
and means of support,
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c. The role of the UNFCCC and its principles and provisions in the new
agreement.
d. The role of market mechanisms and carbon pricing policies. Some options are
on the table that would facilitate the use of markets post-2020.
It was expressed that there are some gaps that need to be closed in the
negotiations on such issues as adaptation, technology transfer, capacity building and
the green climate fund (with limited financial capacity as compared to the amount of
fossil fuel subsidies). It would seem some parties have not fulfilled many pledges and
this raises an issue of trust in the commitments. There is still debate on whether the
new agreement should be a legally binding one or not. There is, however, some
optimism regarding the outcome of the negotiations.
Advancing the WTO Doha Development Agenda
At the WTO, intensive negotiations are taking place to craft a work
programme on the remaining issues of the Doha round of multilateral trade
negotiations with the aim of strengthening the multilateral trading system to meet the
challenges of sustainable development. International trade and the WTO can bolster
global efforts to combat climate change and to achieve sustainable development goals,
as recognized in the proposed SDGs (Goal 17 for example). Where do the Doha
negotiations stand and what are the key issues?
The negotiations progressed significantly in late 2013 with the adoption of the
so-called “Bali package” at the WTO Ministerial Conference in Bali in December
2013. The package included specific and tangible results in certain areas of
agriculture and development, and on trade facilitation. Trade facilitation is the first
multilateral trade agreement in the WTO’s 20-year history. Its ratification by WTO
members is underway. Building on Bali, WTO members are engaging constructively
on establishing a work programme on the remaining issues of the Doha round by a
new target date of July 2015. Intensive negotiations to craft this work programme are
taking place on each of the core Doha areas of agriculture, non-agricultural market
access and services, and in the various negotiating groups on Doha issues, including
renewed talks on environmental goods and services, to move from ideas to proposals.
C: Breaking the silos in international negotiations for the new sustainable
development agenda and finding the connecting vessels
As global negotiations unfold, it is critically important to ensure that the
outcomes of the respective processes fully support each other in order to seize the
unique opportunity to usher in a new era of sustained and inclusive economic growth,
social development, and environmental preservation and sustainable use. International
trade, with globalization, is one of the major 'connecting vessels' that can act as the
bridge between the different global agenda setting processes. Yet international trade
and trade policy is not adequately addressed.
In the proposed SDGs, there are specific references to trade in some of the
goals and implicit references in others. In goals 2 (hunger), 3 (health), 8 (economic
growth), 10 (inequality), 12 (sustainable production and consumption), 14 (oceans),
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15 (ecosystems) and 17 (means of implementation), there trade policy issues are
identified specifically in contribution to these goals achievement. In goals 7 (energy)
and 16 (peace), there is implicit reference to trade. And in goals 1 (poverty), 4
(education), 5 (gender), 6 (water and sanitation), 9 (infrastructure), 11 (cities) and 13
(climate change), there is no specific reference to trade although it can be deduced
from some of the targets for these goals that international trade can make a
contribution. For example target 13.2 of Goal 13 is to "integrate climate change
measures into national policies, strategies, and planning" which would, inter alia,
imply integrating climate change into trade and other macro-economic policies.
A critical aspect to strengthening the linkage between the SDGs themselves
and between them and international trade in particular resides in an accountability
framework. This is foreseen in the High-level Political Forum. However the forum as
constituted is primarily a review mechanism rather than accountability one.
Nevertheless, the reviews at national, regional and global levels would need to
examine not only the progress on implementing each of the goals, but how the
synergy between the goals is enhanced through implementation and the contribution
that trade is making. Such reviews or accountability should be undertaken within the
positive framework of recognizing countries that are meeting the goals and
encouraging those that are lagging behind. More broadly, a re-think of the economic
system that would deliver more sustainable and inclusive development may be
required. In this regard, the concept of the 'circular economy' is one possible 'out-ofthe-box' model. Unlike linear economies where wasteful processes occur, in a circular
economy restoration are created by intent and design and thereby realizes growth with
low or no environmental footprints.
As regards the issue of international trade in the context of the UNFCCC,
Parties recognized it as an issue which was relevant to the climate change agenda and
therefore reflected it in the principles of the Convention in 1992 (Article 3.5). The
principle is supportive of the promotion of an open economic system and specifically
that measures taken to combat climate change, including unilateral ones, should not
constitute a means of arbitrary or unjustifiable discrimination or a disguised
restriction on international trade. Subsequently it was also reiterated in the Kyoto
Protocol (Article 2.3) in that implementing parties should minimize adverse effects on
international trade and social, environmental and economic impact on other Parties.
In the current negotiations on the new climate agreement so far, there has been
no agreement by Parties to engage in discussions on trade as their focus is on issues
that are predominantly related to climate change. There are however several topics
under discussion in the negotiations where the linkage with trade is evident:
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Carbon markets - carbon is traded as a commodity e.g. in Emissions Trading
Response Measures – these are measures put in place to address climate
change that can have an adverse impact on the social and economic
development of other countries.
Agriculture – The agriculture sector has experienced and will continue to feel
the effects of climate change. This therefore has an impact on the trade of
agricultural products.
Bunker fuels – This refers to fuels used in international transport, particularly
maritime shipping and aviation. Regulation of emissions from these sources
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has a direct impact on the cost for moving goods and people, which impacts
on trade. Small Island Developing States, usually located in remote locations,
would be particularly vulnerable to higher transport costs; and
Technology – where IPRs are seen by some as barriers to technology transfer,
deployment and diffusion
Synergies also exist with other multilateral processes – such as the SDGs,
biodiversity, desertification, the Montreal Protocol on Ozone Depleting Substances,
and trade to name a few. Acknowledging the linkages and synergies and addressing
all of these issues in a systematic and coordinated manner is an important.
It would appear that there are three stages to the evolution of interconnections
between trade and climate change. In the early 1990 (the Convention years), the focus
was on how trade-related measures to address climate change would be dealt with. In
the mid-2000s (the Kyoto Protocol years), trade and competitiveness issues in
emissions reduction related measures were highlighted. In the current period (new
agreement or protocol), more transformational issues are at stake and hence the big
issues of national contributions, shared prosperity, adjustment challenges and
financing. In this light, there is need for leadership to reaffirm and uphold the need for
a new accord to guide transition into low carbon economy.
The WTO Doha round includes a trade and environment chapter, but climate
change is not part of it per se. There are several provisions in the WTO rulebook that
may be relevant to key national mitigation measures such as carbon taxes, carbonfriendly labels and standards, and green subsidies. It's Committee on Trade and
Environment (CTE) serves as a venue for constructive dialogue among its members
on the links between trade and the environment. In addition the work of the WTO
Committee on Technical Barriers to Trade is relevant to climate change in such areas
as its extensive discussions on energy efficiency labelling and other product related
environmental requirements with a view to ensuring that these measures do not create
unnecessary obstacles to trade. Moreover, WTO has a highly developed institutional
framework to promote transparency, mutual understanding and cooperation on a
broad range of trade and trade-related issues relevant to climate change. It is, in
essence, an incubator of ideas on how to improve trade policies in a way that makes
them more supportive of environmental sustainability.
The WTO's trade and environment negotiations can assist global efforts on
climate change. A major focus of the negotiations has been to achieve fewer and
lower trade barriers applied to environmental technologies embedded in goods or
services. Reducing trade barriers on climate-friendly products should reduce the price
and facilitate access to these products by a larger number of countries. WTO members
have tabled many proposals to advance the multilateral negotiations on environmental
goods. To date, the crux of these negotiations has revolved around the coverage of the
agreement. Parallel to the multilateral negotiations, in July 2014, a subset of WTO
members formally launched their own plurilateral process to liberalize trade in
environmental goods, building on an agreement by APEC economies to reduce tariffs
on a list of 54 environmental goods. Discussions between WTO members have also
focused on the relationship between the WTO and Multilateral Environmental
Agreements (MEAs). The outcome of these negotiations would formalize existing
cooperation between the WTO and MEA secretariats, including UNFCCC. In
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addition, it would establish concrete means to avoid potential conflicts between WTO
and MEA rules, for example by strengthening national cooperation between trade and
environment government agencies. These would comprise key aspects of an enabling
WTO framework for tackling climate change.
The challenge for the WTO in terms of systemic coherence with other global
framework is that if the post-2015 development agenda and climate change agreement
require bold actions, to what extend is the WTO ready to look back at its agreements
to modulate them to fit the new development architecture that emerges. The WTO
may have to show some flexibility in this regard in terms of both its agreements and
the institution is being fit for the post-2015 era. This overarching aspect could be a
feature of a successful outcome of the WTO's Ministerial Conference in Kenya.
Beyond the multilateral trading system, the competitiveness of production of
countries and capacities to diversify their economies would be affected by climate
change including in terms of disrupting comparative advantage dynamics in food
production for example. Such effects could be policy measures such as carbon border
adjustment taxes, or natural phenomena such as changing weather patterns affecting
food production.
Concluding points
The year 2015 is significant in marking a turning point in the crossroads to
sustainable development. The negotiations on the post-2015 development agenda and
SDGs, financing for development, climate change, and multilateral trade that address
very complex issues in their own domains are expected to be concluded. Each of these
paths is not an end in itself, rather it is an endeavour to secure a global agreement,
with effective means of implementation that will set the policy, legal, financial and
institutional basis for transformational shifts in societies, economies and the natural
environment, leading toward more inclusive and more sustainable development and
poverty alleviation. The stakes are high and the road to Addis Ababa, New York,
Paris and Nairobi provide an unprecedented opportunity for all countries, peoples,
businesses and institutions to join together and act collectively in confronting the
increasingly complex and irreversibly interconnected challenges and risks, and taking
full advantage of emerging opportunities, from the respective global initiatives.
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Climate Change, SDGs and Trade: At the crossroads of
sustainable development
UNCTAD Informal Briefing
10:00 to 13:00, 10 February 2015
Palais des Nations - Room XXVI
Geneva, Switzerland
Provisional Agenda
10:00 - 11:00 Key note addresses

Mr. Guillermo Valles, Director, Division for International trade in Goods and
Services, and Commodities UNCTAD

Ms. Karen Smith, Senior Member of Negotiations Support team, UNFCCC

Mr. David Shark, Deputy Director-General, WTO
11:00 - 13:00: "Davos-type" interactive debate

Mr. Mark Halle, Vice President, International Institute for Sustainable
Development (IISD) and Executive Director of IISD-Europe

Ms. Miriama Williams, Senior Programme Officer, South Centre

Mr. Jacob Werksman, Lead Climate Negotiator, European Commission

Ms. Helga Vanthournout, McKinsey Global Institute, Geneva

Ms. Mere Falemaka, Permanent Representative of the Pacific Islands Forum to
the WTO.
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