Publication - Policy Paper

20 June 2022

Promoting and Facilitating Trade in Environmental Goods and Services: Lessons From Regional Trade Agreements

Trade is increasingly seen as a tool to help foster the diffusion and uptake of technologies vital for climate change mitigation and adaptation, pollution reduction, and biodiversity conservation, and as a way to facilitate the transition to a more circular and resource-efficient economy. This recognition is prompting renewed interest in how governments can cooperate internationally to promote and facilitate trade in environmental goods and services (EGS), and to do so in ways that support sustainable development priorities of developing countries.

At the multilateral level, discussions on EGS are gaining fresh momentum, notably in the context of the Trade and Environmental Sustainability Structured Discussion (TESSD) and the Dialogue on Plastics Pollution, launched in 2020 at the World Trade Organization (WTO). This comes after years without significant action on this topic at the WTO, during which time attention shifted to bilateral and regional EGS initiatives. A range of WTO members have highlighted the need to build on the experience of regional trade agreements, including as incubators of new approaches to EGS, and explore how this could inform multilateral discussions.

As a contribution to these discussions, this policy paper reviews approaches to incorporating EGS-related provisions in trade agreements, defining the scope and coverage of EGS, and designing substantive provisions on EGS. It also examines support measures for developing countries. Based on this analysis, it presents a set of options that WTO members could consider when exploring ways to facilitate and promote trade in EGS.

In the absence of significant action on facilitating and promoting trade and investment in environmental goods and services at the multilateral level, regional trade agreements have become the de facto locus for cooperation in this area, serving as laboratories for innovation, incubation, and testing of new ideas and approaches.

Christophe Bellmann and Mahesh Sugathan

Recommended citation: Bellmann, C. & Sugathan, M. (2022). Promoting and facilitating trade in environmental goods and services: Lessons from regional trade agreements. Forum on Trade, Environment, & the SDGs (TESS).