Environment and Trade Hub Frequently Asked Questions

What is the mandate and mission of your work? production to international markets. Today’s agriculture, manufacturing, and services sectors feature global supply The mandate of UNEP is “to be the leading global chains that span all countries, moving rapidly from the environmental authority that sets the global environmental extraction of natural , to multiple processing and agenda, that promotes the coherent implementation of the manufacturing steps, to final products, adding value at environmental dimensions of every stage. International trade grew on average 5 per cent within the UN system and that serves as an authoritative a year between 2000 and 2011 and now represents nearly advocate for the global environment.” (Nairobi Declaration 30 percent of global (GDP). Trade adopted in 1997). can play an important role in allocating global resources more efficiently, fostering technology proliferation and The Trade, Policy and Planning Unit serves as UNEPs innovation, alleviating poverty, creating jobs and driving voice and representative on matters of international trade. the transition to a green economy. In the 2030 Agenda for The inherent work vision is for trade to be a driver of Sustainable Development, trade has been identified as a . This translates into the mission to actively cross-cutting means of implementation of SDGs. shape global governance at the trade & environment nexus, and to provide authoritative research, capacity- Trade is a vital part of the global economy and interlinks building, and outreach that inform, inspire and support with the environment at many levels. Trade liberalization countries to develop trade-related policies and practices impacts the environment, in negative or positive ways. The for a socially inclusive, greener economy and poverty challenge is to augment positive environmental effects, reduction. while mitigating and minimizing negative impacts. If designed properly, trade policy instruments can contribute The bulk of UNEPs trade related work is delivered to the efforts of addressing and alleviating environmental through the UNEP Environment and Trade Hub, which is a problems. UNEP, as the UN organization with a mandate partnership model aimed at assisting countries in building principally focused on environmental issues, cannot their capacities for using sustainable trade as a vehicle for neglect the important links between the environment and achieving the 2030 sustainable development agenda and trade. Addressing this nexus, UNEP remains vigilant of the the SDGs. Through the Hub, UNEP works with partners in additional stress that growing volumes of international four key areas: trade have put on the environment, for example in terms • enhancing trade and investment in environmentally of natural extraction and greenhouse gas (GHG) sound technologies (EST); emissions. UNEP works to ensure that trade serves as a vehicle for achieving sustainable development and • shaping governance at the trade, investment and facilitates, rather than undermines, the Green Economy environment nexus; transition. • greening global value chains to promote sustainable How can international trade enhance and production; and sustainable development and environmental • reducing the footprint of trade and greening the brown. protection? These four work areas are also reflected throughout UNEPs trade related delivery under the Green Economy The key to fostering a mutually conducive relationship and Trade Opportunities Project (GE-TOP), the between trade and environment is policy coherence, Partnership for Action on Green Economy (PAGE), the including the elimination of tariff and non-tariff barriers for United Nations Forum on Sustainability Standards environmental and ancillary services, the reform of (UNFSS) and further global, regional and national project environmentally harmful subsidies, the cost internalization activities. of environmental externalities from production and Why does trade matter for UNEP’s work? consumption, and appropriate incentive schemes (e.g. feed-in-tariff for renewable ). Policy analysis and Trade is indispensable for connecting national advise, as well as technical assistance and capacity

unenvironment.org/explore-topics/green- economy/what-we-do/environment-and-trade-hub Environment and Trade Hub Frequently Asked Questions building, are therefore key areas of UNEP`s Trade work, UNEP promotes the mutual benefits trade offers for foremost delivered through the UNEP Environment and trading partners, while working towards minimizing Trade Hub. environmental externalities. According to international trade theory, countries have a “comparative advantage” In practical terms, trade offers opportunities for greening for those products and services that they can offer international supply chains, diffusing green technology at lower (opportunity) cost compared to others; this and innovation, and re-allocating unevenly distributed depends on parameters like natural resource base, factor natural resources in an efficient way across the globe. endowments, labor cost or technological progress. If In the same vein, sustainable development offers trade countries focus on production of goods where they have opportunities, including by opening new export markets a comparative advantage, while interacting in an open and for environmental goods and services and enhancing liberalized international market, the cost-effectiveness of trade in sustainable goods through product certification. production is enhanced, and all parties gain from lower How does your work link to the global agenda prices. for , like the Specialization according to comparative advantage Sustainable Development Goals or Financing offers the additional benefit of scale, whereby producers for Development? lower marginal / unit costs through economy-of-scale production. Mutual trade also allows countries to benefit In light of the on Climate Change, the from joint use of infrastructure and to share commercial, WTO Ministerial Conference in Nairobi, the Sustainable regulatory and political risk, for example for cross-border Development Goals and the Financing for Development electricity grid lines. UNEP supports trade liberalization to agenda, and negotiations for an Environmental Goods the extent that it serves socio-economic objectives and Agreement (EGA), the regulatory framework governing the stewards the environment, for example through reduced trade-environment nexus is being decisively re-shaped. resource intensity of production. This also ensures UNEP participates in the international decision-making that realization of comparative production advantages processes, through: does not lead to a “race to the bottom” (enhancing market competitiveness by lowering environmental and • cutting-edge research outputs, sustainability requirements). Of course, the trans-boundary • inputs to draft negotiation documents for discussion, trade of goods, as compared to localized production, also and creates externalities from transportation (road transport, shipment) and logistics (cooling of goods etc.). Together • membership in international policy fora, including the with internal and external partners, UNEP Trade addresses WTO Committee on Trade & Environment and the OECD the trade footprint from transportation under Work Area Joint Working Party on Trade & Environment. 4 of the Environment and Trade Hub, while assisting In regard to the SDGs, UNEP has contributed to analytical countries in identifying and enhancing their comparative exercises of identifying the role of Trade for the SDGs advantage(s) in green sectors and reaping related export agenda, thereby especially focusing on trade as cross- opportunities. cutting means of implementation (see SDG 17). The key What about developing countries – can they delivery mechanism for helping countries implement their also benefit? objectives and commitments under the 2030 Agenda for Sustainable Development is the UNEP Environment and The report “Green Economy and Trade – Trends, Trade Hub. Challenges and Opportunities” (UNEP, 2013) finds that How can countries benefit from trading rather developing countries are especially well-placed to benefit than pursuing regionalized and localized from market liberalization and trade in environmental goods as they often have a comparative advantage production and consumption? in these segments and a rich endowment in natural

unenvironment.org/explore-topics/green- economy/what-we-do/environment-and-trade-hub Environment and Trade Hub Frequently Asked Questions resources. For example, Latin American countries feature UNEP also monitors high-level policy dialogues on trade rich , while African countries have high solar and environment, including as an official Observer of the irradiation levels for solar energy production. The UNEP WTO’s Committee on Trade and Environment. Through report “South-South Trade in ” (2014) events, outreach, and a global network of trade and finds that the traditional South-North trade paradigm environment professionals in government, civil , is increasingly replaced by a South-South trajectory, academia, NGOs, and private sector, UNEP aims to assure with emerging economies at the forefront of increased that trade policies are conducive to the green economy consumption. Already today, South-South trade accounts transition. for one-third of global trade and is further increasing. This implies that developing countries increasingly identify and Concrete project activities at national, regional and reap the benefits from trade. The challenge, that UNEP global level span from enhancing regional clean energy aims to help countries address, is to design development integration in the West African Power Pool, to supporting paths in a manner that enables economic growth while the production and export of organic agriculture from stewarding the environment and unlocking potential for South Africa, to promoting the uptake and compliance sustainable, long-term development. with sustainability certification in the aquaculture sector of Vietnam, to enhancing intra-ASEAN value chain integration One particular example of an initiative that can offer and trade in clean energy technologies, to assessing triple-win opportunities for sustainable development, the role of environmental provisions in regional trade the environment and trade is the Environmental Goods agreements, to developing a global trade flow analysis Agreement (EGA). By participating in shaping the EGA, for environmental goods, to name a few. For more developing countries could benefit from enhanced information, see the UNEP Environment & Trade web page. development, deployment and trade of renewable energy technologies and other select environmental Talking about sustainability standards – in goods, including through access to new technologies what way can trade enhance the diffusion and and clean energy, participating in global value chains, uptake of these? building trade and productive capacity, and enhancing national skills development. The global environmental Green markets are rapidly growing in countries goods market offers vast opportunities; it accounts for worldwide as governments, the private sector and a financial volume of USD 1 trillion annually and growing consumers become more informed about implications fast. Under Work Area 1 of the Environment and Trade of consumption and increasingly demand healthy goods Hub, UNEP, in cooperation with the EC and other partners, that are sustainably produced and traded. As a result, assesses challenges and opportunities for engagement of sustainability standards have proliferated in recent years, developing countries in the EGA process and offers related with market share for standard-compliant products capacity-building and technical assistance. projected to further grow across sectors. Sustainability Standards are non-obligatory market requirements Please give concrete examples of the work informing consumers and producers about the UNEP is doing at the trade – environment environmental and/or social performance of a product or nexus. service, and reflecting certain health, environmental and ethical values. Trade has enormous potential to facilitate the transition to a green economy and therewith to contribute significantly Sustainability standards provide a vast opportunity to sustainable development. However, trade policy is for green trade in that they differentiate sustainable complex and requires careful to assure and unsustainable production, and reward sustainable positive environmental and social outcomes. In this light, practices through market access or premium prices. UNEP coordinates trade-related research and policy This creates an incentive for producers to adjust their guidance, and offers policy support and capacity-building production to sustainability criteria. In general, the to national governments including developing countries. production of certified products takes place in the global South, whereas the bulk of consumers is in developed

unenvironment.org/explore-topics/green- economy/what-we-do/environment-and-trade-hub Environment and Trade Hub Frequently Asked Questions countries. International trade has the crucial role of for Fishery Subsidies” draws attention on overfishing and connecting consumer and producer markets. For example, the importance of fisheries subsidies reform. UNEP has in the organic sector, developing countries account for also undertaken a series of country projects in Ecuador, roughly 65% of production, while 90% (in terms of revenue Southern Africa and Vietnam with the objective of generation) of the consumption takes place in developed reforming trade and fishery policies and reshaping supply countries. chains for sustainable . For energy subsidies, UNEP has worked with the IEA on several Sustainability standards can provide new opportunities thematic workshops which have served as a platform for for countries to access international markets, potentially dialogue among multiple stakeholders and for sharing of with higher price premiums for exports of environmentally experiences among countries. preferred products (EPPs). Developing countries often have a natural comparative advantage in these markets. How do you perceive the link between trade In cooperation with internal and external partners, and investment? and building on relevant prior work, Work Area 3 of the Environment and Trade Hub aims to use greener Trade policy affects market access for exports and markets, trade and investment as vehicles for promoting imports of goods and services, generating higher earnings and production. This work in some sectors and lower earnings in others. Thus, it stream includes inter alia projects on mapping drivers has a direct impact on the basket of goods and services and export markets for certified production, on assessing that each country produces. With around 30 percent of the effectiveness and impact of sustainability standards, global GDP accounted for by exports, trade policy drives and on supporting countries to develop conducive policy a significant portion of domestic production. As a result, frameworks; yet, various high-impact areas remain vacant trade policy also strongly impacts public and private for engagement at national and/or global level. For its investment, which tends to flow into the most productive activities in the field of green markets and sustainability sectors of the economy. International investment in standards, UNEP closely coordinates with its partner particular may tend to target sectors with a high volume organizations in the UN Forum on Sustainability Standards of international trade. The World Bank has estimated that (UNFSS). around 55-60 percent of global trade volume is now intra- firm trade, that is, based on companies’ direct investment Another example are environmentally harmful abroad. subsidies. How does UNEP help reduce, or even eliminate, those subsidies that encourage Does UNEP feel that trade is always good for over-consumption of fish, fossil fuels etc.? the environment? If not, what is UNEP doing about negative impacts from trade? UNEP seeks to further the understanding and awareness of the negative impacts of environmentally harmful Emissions from international maritime and aviation subsidies and contribute to the international discussion transport have increased by 88 percent over the past on subsidy reform by conducting analyses, facilitating 25 years, and trade-related increases in national international stakeholder consultations and enhancing production for export can strongly impact natural the capacities of policy makers to develop the necessary resource exploitation and the environment. Furthermore, reform policies. With a focus on the energy and fisheries trade could undermine global emission reduction due sectors, UNEP has widely engaged in multilateral efforts to relocation of production from countries with higher for subsidies reform, including at the WTO. environmental standards to those with lower standards and rules. When improperly managed, trade can facilitate For instance, the UNEP book on “Fisheries Subsidies, unsustainable extraction of natural resources and markets Sustainable Development and the WTO” provides a for illegal wildlife. This was elaborated in a recent report by comprehensive reference manual for policy makers as the International Resource Panel. well as academics. The documentary on “The Way forward

unenvironment.org/explore-topics/green- economy/what-we-do/environment-and-trade-hub Environment and Trade Hub Frequently Asked Questions

Thus, while focusing on inclusive opportunities at the their capacities for using sustainable trade as a vehicle for trade-environment nexus, it is important to remain vigilant achieving the 2030 Agenda for Sustainable Development. against the potentially negative environmental and By working through a network of national, regional, social effects of today’s rapidly expanding trade. Under and international partners, the Hub is able to offer Work Area 4 of the Environment and Trade Hub, UNEP interdisciplinary services that are tailored to local needs addresses these challenges by creating awareness and and circumstances while being delivered in an effective helping monitor the environmental footprint of trade, to and demand-oriented manner. reduce the environmental costs of economic activity. The Hub’s capacity building services include tailored 12. How do trade and investment agreements impact how technical trainings to support international, regional and we govern the environment? national design and implementation of sustainable trade and investment policies; targeted stakeholder trainings; In recent years, regional trade agreements (RTAs) and advisory services and assistance in designing trade investment treaties have rapidly proliferated and are and environment related agreements; development of becoming important tools for deepening global economic tools, methodologies and indicators for sustainable integration and liberalization, with profound consequences trade; identification and dissemination of best practices; for sustainable development, consumption and support to national, regional, and international dialogues production. RTAs and investment treaties often contain on advancing the sustainable trade agenda; as well as the obligations that are wider in scope, deeper in commitment identification of sector – or region-specific sustainable and significantly more sophisticated than what is production and trade opportunities. These services are being considered at the multilateral level. This trend delivered in four Work Areas, in direct alignment with has culminated in development of the “mega-regional” particular elements of the SDG Agenda. These four agreements, namely, the Transpacific Partnership (TPP) work areas are also reflected throughout UNEPs trade and the Transatlantic Trade and Investment Partnership related delivery under the Green Economy and Trade (TTIP). Incorporating, monitoring and evaluating the Opportunities Project (GE-TOP), the Partnership for Action environmental, social and economic sustainability aspects on Green Economy (PAGE), the United Nations Forum of regional trade and investment agreements, based on a on Sustainability Standards (UNFSS) and further global, firm set of sustainability principles informed by MEAs and regional and national project activities. other mutual environmental commitments, is essential to assure that these agreements foster rather than impede the shift to inclusive greener economies. Under Work Area 2 of the Environment and Trade Hub, UNEP aims For its different activities, UNEP Trade works closely with to promote sustainable growth and human well-being national, regional and global implementation, advocacy through monitoring and enhancing the development and funding partners for effective and tailored delivery. and implementation of environmental provisions These include partners within UNEP, national and in international and regional trade and investment regional research institutes and government bodies, and agreements, to assess implications for other international intergovernmental and non-governmental organizations. agreements (including MEAs), and to firmly anchor Examples are the partners under PAGE (ILO, UNIDO, environmental principles in national, regional and global UNITAR, UNDP) and UNFSS (ITC, FAO, UNCTAD, UNIDO), governance. as well as the WTO, OECD, IISD, ICTSD, and many national and regional partners. How do you operate and who are your partners?

The bulk of UNEPs trade related work is delivered through the UNEP Environment and Trade Hub, which is a partnership model aimed at assisting countries in building

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