STRENGTHENING DISCUSSIONS AND COOPERATION ON CARBON STANDARDS

COMMUNICATION FROM CHINA

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1  BACKGROUND

1.1.  Green and low-carbon transition is the trend of our time. It is important that Members strengthen international coordination in green technologies and industries, to ensure the benefits of green development can reach all corners of the world.

1.2.  During this transition, a prominent development is the increasing number of carbon standards established or referenced by different Members and regions when formulating their trade related climate measures (TrCMs). As a result, carbon standards are playing an increasingly impactful role in addressing the intertwined challenges of climate change and international trade. In parallel, the risk of fragmentation of carbon standards is unfolding, leading to uncertainty for international trade and increasing the operational cost for exporters and importers grappling with repeated accounting, reporting and verification. 

1.3.  In recent years, the World Trade Organization (WTO) has conducted researches and discussions on the implications of carbon standards on trade. At the macro level: In April 2024, the United States submitted the paper Understanding Opportunities and Challenges in the Green Transition: Consistency and Interoperability of Trade-Related Climate Measures (_WT/CTE/W/260), which for the first time raised the issue of consistency and interoperability of TrCMs. The Least Developed Members (LDCs) submitted the paper Perspectives on LDC Environment-Friendly Trade and Trade-Related Climate Challenges (_WT/CTE/W/266), which also recommends cooperation on standards.
At the micro level, Japan and other Members have put forward the Non-Binding Guidance on the Methodologies for Measuring Embedded Emissions (_WT/CTE/W/269), suggesting that measurement methods should be based on international standards. The WTO Secretariat has carried out several researches: the World Trade Report 2022 and Trade Policy Tools for Climate Action put forward a number of suggestions for strengthening cooperation on standards.

1.4.  In June 2024, China submitted the paper Advancing Multilateral Discussions on Trade-Related Climate Measures (_WT/CTE/W/263), suggesting enhanced communication on issues such as improving the transparency and understanding of TrCMs (including standards and other regulatory measures), strengthening consistency and interoperability, and reducing potential trade frictions. Building on the recommendations of this paper and work conducted by Members and WTO secretariat, this paper intends to explore the fragmentation challenges of carbon standards at the meso level and encourage discussion and cooperation to mitigate and address its impact on trade. Therefore, it intends to complement the existing discussions and work carried out at WTO, not to add to or detract from the rights and obligations of Members under any WTO agreement.

2  THE CHALLENGES OF FRAGMENTATION OF CARBON STANDARDS DESERVES THE ATTENTION OF WTO

2.1.  Regarding International Standards on Carbon Emission. The International Organization for Standardization (ISO) is collaborating with the GHG Protocol: Product Life Cycle Accounting and Reporting Standard to jointly revise standards such as ISO 14064 and ISO 14067. This collaboration aims to align the boundaries, methods, and requirements for carbon emission accounting across enterprises, products, and projects. The coordination and cooperation on international standards provide an important foundation for members to formulate carbon-related policies and regulations.

2.2.  Regarding National Standards on Carbon Footprint. Relevant practices at the national and regional levels differ from international standards in aspects such as system boundaries, data requirements, quantification methods and disclosure requirements for specific product carbon footprints. These differences increase the difficulty of compliance.

2.3.  Regarding Mutual Recognition and Interoperability. Technical requirements for the disclosure, reporting, filing, and verification of carbon related data vary across national regulatory systems. There is an urgent need to enhance mutual recognition for processes and develop international standards to promote interoperability.

3  SUGGESTIONS FOR STRENGHENING DISCUSSIONS AND COOPERATION ON CARBON STANDARDS

3.1  Systematically Review Carbon Standards and Enhancing Information Sharing

·_              The WTO Secretariat takes a compilation of previous discussions, suggestions and researches conducted or made related to carbon standards to help Members better review the progress made and determine the focus of future work.

·_              The Committee on Trade and Environment (CTE), in collaboration with the Committee on Technical Barriers to Trade (TBT), takes a compilation of technical regulations and conformity assessment procedures (CAPs) related to carbon standards based on Members’ notifications, identifies the differences of those practices, analyzes their potential trade impacts, and draft relevant research reports.

·_              The TBT Committee establishes a separate column in its notification database to compile information on relevant technical regulations and CAPs by further utilizing relevant digital tools and periodically shares those information with CTE.

3.2  Strengthening Discussions and Cooperation on Carbon Standards

·_              The CTE, in cooperation with the TBT Committee, considers conducting more structured and in-depth discussions to enhance Members’ understanding of relevant issues. One important step is to organize thematic seminars on the development and impact of carbon standards to explore possible ways for strengthening cooperation.

·_              WTO should be encouraged to strengthen cooperation with other international organizations such as ISO, IEC and ITU, inviting their participation in WTO meetings and when necessary, applying for observer or liaison seats at ISO committees to support their standard-making process and providing suggestions from the perspective of facilitating international trade.

3.3  Addressing the Challenges Faced by Developing Members

·_              Encourage the CTE in cooperation with the TBT Committee and the Committee on Trade and Development (CTD) to organize thematic discussions and other forms of discussions to explore ways to help developing Members, especially LDCs, better address standard related challenges.

·_              Encourage Members to commit to Article 12 of the Agreement on Technical Barriers to Trade and the Declaration on the Precise, Effective and Operational Implementation of Special and Differential Treatment Provisions of the Agreement on the Application of Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade adopted at the 13th WTO Ministerial Conference (MC13) when formulating and implementing relevant technical regulations, standards and CAPs, and to explore possible ways to provide more flexibility for small economies and LDCs when implementing carbon standards.

·_              Strengthen capacity-building assistance for developing Members, including better utilizing the biennial training program, incorporating more content on carbon standards. Enhance the capabilities of developing Members in standards making, implementation, and compliance. Provide support to developing Members to participate in the making of international carbon standards.

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