Climate and trade policies: from silos to integration

Abstract

ABSTRACT This paper investigates linkages between trade and climate policies by examining commitments made in preferential trade agreements (PTAs) and Nationally Determined Contributions (NDCs) under the Paris Agreement. While environmental protection and economic growth are often perceived as conflicting policy goals, PTAs and NDCs have the potential to encourage mutually supportive approaches to climate and trade governance. Building upon three recent datasets, the paper locates a sample of 21 countries in a typology of four issue-linkage strategies across both types of instruments: policy integration, policy silos, asymmetry in favour of trade policy, and asymmetry in favour of climate policy. It finds that countries that reveal a preference for strong linkage with climate in their PTAs typically do not reveal a preference for strong trade linkage in their NDCs, and vice versa. No state from the sample favours strong policy integration. After sketching out possible explanations for this observation, the paper concludes that policy-makers have significant room for enhancing synergies between trade and climate commitments and that scholars have a role to play in this endeavour. Key policy insights There is substantial untapped potential for simultaneously promoting trade and tackling the climate crisis across borders in future NDCs and PTAs. In future NDCs, trade provisions, e.g. the reduction of trade barriers for climate-friendly goods and services, should be strengthened in national climate plans. Countries should make better use of climate provisions in their PTAs, e.g. to encourage their trade partners to commit to binding climate objectives and foster exchanges of climate-friendly goods and services.