Trade Policy Tools and Instruments for Addressing Climate Change and Sustainable Development

The document identifies several trade policy levers to address climate change, including the liberalization of trade in low-emission goods, the reinstatement of subsidies for greenhouse gas (GHG) reduction, the removal of domestic barriers to clean energy investment, the relaxation of intellectual property rights for green technologies, and the reduction of fossil fuel subsidies. It emphasizes that trade policy must be part of a broader suite of complementary fiscal and regulatory measures and suggests that while the WTO is the primary venue for multilateral action, plurilateral or regional agreements may serve as alternatives.

• Lowering tariff and non-tariff barriers (NTBs) for low-emission goods could increase the uptake and investment in these technologies. The document categorizes these goods into renewable energy/clean conventional technologies, goods with cleaner end-use, and goods with cleaner production processes, noting that the latter two are harder to define as they require relative standards against a baseline.
• The document suggests reinstating and recasting the 'non-actionable subsidies' from the Agreement on Subsidies and Countervailing Measures (SCM), which expired in 1999, to support climate objectives. Potential areas for these carve-outs include R&D for low-GHG technologies, low-GHG retrofits, and renewable energy investments with high up-front costs.
• Domestic barriers to foreign direct investment (FDI) in the energy sector—such as customs procedures, licensing permits, and regulatory regimes—hinder the transition to a low-carbon economy. The paper suggests that multilateral initiatives, potentially through the World Bank's Energy Sector Management Assistance Programme or the Energy Charter Treaty, could help remove these barriers.
• While some argue that strict intellectual property rights (IPRs) block the transfer of clean technologies, the document notes that relaxing IPRs alone is insufficient because technology transfer also requires 'absorptive capacity' (technical and managerial expertise) in the receiving firm.
• Fossil fuel subsidies distort markets and discourage investment in alternative technologies. The IEA estimated that removing consumption subsidies in eight large non-OECD economies could lower global CO2 emissions by 4.6%, and that total energy subsidies in 2005 reached $250 billion, with $90 billion for oil products.

APA

Cosbey, A. (2007). Trade Policy Tools and Instruments for Addressing Climate Change and Sustainable Development. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/trade_tools_climate_sd.pdf

Chicago

Cosbey, Aaron. Trade Policy Tools and Instruments for Addressing Climate Change and Sustainable Development. International Institute for Sustainable Development, 2007. https://www.iisd.org/system/files/publications/trade_tools_climate_sd.pdf.

Wikipedia

{{cite report |last1=Cosbey |first1=Aaron |title=Trade Policy Tools and Instruments for Addressing Climate Change and Sustainable Development |publisher=International Institute for Sustainable Development |date=2007 |url=https://www.iisd.org/system/files/publications/trade_tools_climate_sd.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cosbey2007trade, author = {Cosbey, Aaron}, title = {{Trade Policy Tools and Instruments for Addressing Climate Change and Sustainable Development}}, institution = {International Institute for Sustainable Development}, year = {2007}, url = {https://www.iisd.org/system/files/publications/trade_tools_climate_sd.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }