Coordinating UK trade and climate policy ambitions: A legislative and policy analysis

Abstract

The UK Government has pledged to achieve net-zero carbon emissions by 2050 but also champion open multilateral trade and pursue new trade relationships with geographically distant partners. The dynamism of policymaking in both areas, as the UK leaves the EU, provides a useful case study for the larger question of how to reconcile liberal trade policy with a net-zero target. After setting out the relevance of trade policy to the climate target, we examine areas at their intersection: current and proposed UK green subsidies, regulatory trade barriers, potential carbon border adjustment, fossil fuel subsidies and free trade agreements. We apply two analytical tests: compliance with relevant World Trade Organisation obligations and coherence with the net-zero climate target. The analysis is hindered by uncertainty, primarily regarding the extent of future global climate ambition, but there are clear areas in which the UK could strengthen its approach to climate change mitigation without undermining its commitment to open trade. Barring a major increase in global ambition, achieving the net-zero target will, however, likely require new trade restrictions. The implication is that, rather than being situated at the margins, the climate target must comprise a central objective of trade strategy.

Climate Equivalence and International Trade

“…Achieving such convergence is a steep challenge. Discussions on convergence are ongoing in various fora, including the OECD, International Deep Decarburization Initiative, World Bank and International Standards Organization (Lydgate et al, 2022). Such discussions have the potential to aid progress toward climate clubs.…”

Questioning a Fair Settlement as The Legal Resolution of Global Interests

“…[26] However, despite the high-level participation of leaders from across the globe, a meaningful agreement on global carbon emission limits was not reached by the end of the conference [27]. The official statements issued by the participating countries' leaders are merely public statements, and there is still a need for additional effort, time, and resources to refine them further [28].…”

Implementation of EU Trade Agreements Under an Assertive, Open, and Sustainable Trade Policy

“…The arrangements enable the parties, for the first time under an EU PTA, to take direct actions, including restricting trade, if measures in the other party are lowering environmental and social standards, without the need to wait for arbitration or dispute settlement, although there are strict requirements and tests before actions can be taken (Collins, 2021). However, it is unclear exactly how this will work, and by providing an avenue for the parties to override adverse third-party rulings, it can bring the TCA into question (Lydgate et al, 2021). Nonetheless, the intention is to exercise control over economic decisions elsewhere and guarantee the implementation of the TCA.…”