Big Green Gaps: Our inability to tackle the messy issues at the interface of trade, development and the green economy

This document is an address by Aaron Cosbey of the International Institute for Sustainable Development (IISD) delivered to the 49th Session of UNCTAD’s Trade and Development Board on September 25, 2012. Cosbey argues that the outcomes of the Rio+20 conference are insufficient for guiding states through the trade tensions arising from the transition to a green economy. He highlights the conflict between the use of green industrial policies—such as subsidies and local content requirements—and their impact on the multilateral trading system, particularly for developing countries. Cosbey calls for a non-legal, non-negotiating framework, potentially led by UNCTAD, to determine the propriety and effectiveness of these measures before they escalate into formal trade disputes.

• The Rio+20 conference produced an outcome document, "The Future We Want," which provides guidance that green economy policies should be consistent with international law, avoid arbitrary discrimination or disguised trade restrictions, avoid unilateral actions for environmental challenges outside the importing country's jurisdiction, and be based on international consensus for transboundary or global problems. However, the author argues this guidance is insufficient for navigating the evolving trade system.
• The pursuit of a green economy is accelerating due to three primary drivers: scientific evidence of climate change (such as record Arctic ice loss), potential development benefits including energy security and human health, and a growing belief in the viability of industrial policy.
• Green economy policies—defined as measures intended to achieve environmental ends and national economic goals—often involve tools with significant trade impacts. These include various subsidies (tax preferences, cash grants, feed-in tariffs), local content and performance requirements, border carbon adjustments, product carbon footprint labelling, and export or trade restrictions based on environmental standards.
• There is a critical lack of international agreement on the propriety of green industrial policies, specifically regarding whether they are effective in helping infant industries mature and how they impact trading partners through the diversion of market share from foreign to domestic producers.
• The absence of a common understanding on green economy measures has led to increased trade frictions and the use of the WTO's Dispute Settlement Mechanism (DSM) for issues of propriety rather than simple rule breaches. Examples of these frictions include U.S. anti-dumping duties on Chinese solar cells, Chinese challenges to U.S. renewable energy subsidies, and EU anti-dumping investigations into Chinese solar modules.
• The WTO is currently unable to provide the necessary space for discussing the propriety of green economy tools because the unfinished Doha Round prevents the discussion of significant issues outside its mandate, as evidenced by the rejection of a Singaporean proposal to discuss border carbon adjustments.
• The author proposes that UNCTAD, or a collaboration of institutions, should create a non-legal, non-negotiating framework to facilitate discussions on the effectiveness and ancillary effects of green economy measures before they become formal trade disputes.

APA

Cosbey, A. (2012). Big Green Gaps: Our inability to tackle the messy issues at the interface of trade, development and the green economy. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/big_green_gaps.pdf

Chicago

Cosbey, Aaron. Big Green Gaps: Our inability to tackle the messy issues at the interface of trade, development and the green economy. International Institute for Sustainable Development, 2012. https://www.iisd.org/system/files/publications/big_green_gaps.pdf.

Wikipedia

{{cite press release |last1=Cosbey |first1=Aaron |title=Big Green Gaps: Our inability to tackle the messy issues at the interface of trade, development and the green economy |publisher=International Institute for Sustainable Development |date=25 September 2012 |url=https://www.iisd.org/system/files/publications/big_green_gaps.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{cosbey2012big, author = {Cosbey, Aaron}, title = {{Big Green Gaps: Our inability to tackle the messy issues at the interface of trade, development and the green economy}}, publisher = {International Institute for Sustainable Development}, year = {2012}, month = sep, url = {https://www.iisd.org/system/files/publications/big_green_gaps.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }