Committee on Trade and Environment - Key considerations for trade-related climate measures : suggested approaches toward a sustainable future - Communication from the Republic of Korea

KEY CONSIDERATIONS FOR TRADE-RELATED CLIMATE MEASURES:
SUGGESTED APPROACHES TOWARD A SUSTAINABLE FUTURE

COMMUNICATION FROM THE REPUBLIC OF KOREA

The following communication, dated 21 March 2025, is being circulated at the request of the delegation of the Republic of Korea.

 

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1  LEVERAGING TRADE FOR CLIMATE ACTION: ADVANCING SUSTAINABLE DEVELOPMENT AND ECONOMIC PROSPERITY

1.1.  The climate crisis has emerged as a critical and pressing concern for the global community, necessitating immediate and collective action. Given the urgency of addressing this crisis, WTO Members have been implementing a comprehensive range of actions aimed at reducing carbon emissions, accelerating low-carbon transitions, and fostering climate-resilient development pathways. Recognizing the substantial role of anthropogenic activities in driving climate change, a system-wide approach is vital to ensure the coherence and effectiveness of these measures.

1.2.  In this context, trade can serve as a powerful engine for climate action by fostering economic development while also supporting the transition to net-zero emissions. At the same time, varying national strategies to combat climate change should be considered within the multilateral trading system. This would ensure climate action is pursued in a manner that supports – rather than restricts – trade, investment, and business activities. By embracing an open and facilitative trading environment, WTO Members can generate tangible economic benefits, support workforces, and drive sustainable growth while effectively addressing the climate emergency.

2  TRADE-RELATED CLIMATE MEASURES: CURRENT DEVELOPMENTS AND DISCUSSIONS

2.1.  An increasing number of WTO Members are either adopting or considering a diverse array of trade-related climate measures (TrCMs) to meet their climate objectives. The landscape of TrCMs is broad, complex, and constantly evolving, with new approaches rapidly emerging. A key challenge is to balance robust climate ambition with trade-related instruments that ensure fairness, transparency, and proportionality, while avoiding unnecessary barriers to trade. Indeed, TrCMs should be designed to foster a favorable trade environment by promoting fair competition and inclusivity while, where appropriate, minimizing potential negative consequences to the greatest extent possible.

2.2.  WTO Members are actively engaging in numerous discussions and submissions related to TrCMs across various WTO bodies, like the Committee on Trade and Environment (CTE) and the Committee on Technical Barriers to Trade (TBT). Notably, the United States (_WT/CTE/W/260), China (_WT/CTE/W/263), Japan (_WT/CTE/W/264), and Djibouti on behalf of LDCs (_WT/CTE/W/266) have submitted papers. In addition, two thematic sessions on TrCMs have taken place in the CTE (_RD/CTE/265 and _RD/CTE/288), providing Members with the opportunity to present their perspectives, share national experiences, and explore areas for collective action.

2.3.  Building on these discussions, this proposal seeks to set forth suggested approaches to TrCMs, which aim to provide Members with a structured yet flexible guide to help ensure coherence across different policy frameworks. Recognizing that the applicability of suggested approaches may vary depending on the specific measure and national context, these approaches are intended as a valuable reference for policymakers.

3  OUTLINING SUGGESTED APPROACHES FOR TRADE-RELATED CLIMATE MEASURES

3.1.  To minimize the negative consequences arising from fragmented climate measures on trade, while applying the measures non-discriminatorily, it is important to establish a set of shared considerations that promote consistency, interoperability, flexibility, and transparency.

3.1  Consistency and Interoperability

3.2.  A lack of consistency and interoperability may be perceived as a barrier to trade and can undermine collective climate objectives. Collective efforts among WTO Members are therefore essential to develop a common understanding of TrCMs and to avoid a fragmented patchwork of measures.

3.3.  Members are encouraged to consider adopting international standards for measuring carbon emissions. Members are encouraged to explore ways to enhance interoperability across national systems, such as through mutual recognition of measurement, reporting and verification (MRV) frameworks, while considering effective carbon prices, be it explicit or implicit prices, where possible.

3.2  Reasonable Flexibility

3.4.  It is important to reduce unnecessary administrative burdens as we seek to achieve proportionality between environmental benefits and regulatory costs. Members may consider options like exemptions, including de minimis thresholds, or grace periods to mitigate the impact on vulnerable businesses such as micro, small and medium-sized enterprises (MSMEs). Additionally, conducting impact assessments for MSMEs – especially those from least-developed countries (LDCs) – can help design measures in a fair and equitable manner.

3.5.  Members are encouraged to ensure protection of business confidentiality, by, for example, providing reporting options (e.g., allowing exporters, not limited to importers, to report the relevant information directly) and limiting the scope of required information to only what is necessary for environmental purposes.

3.3  Transparency

3.6.  Transparency is particularly crucial in addressing climate change, a global challenge that requires widespread access to information for Members, stakeholders, and civil society. Given the far-reaching implications of TrCMs, ensuring transparency is essential to fostering trust, accountability and effective policy implementation. Clear, accessible and timely information on the rules and procedures of TrCMs helps businesses understand regulatory frameworks, assess market opportunities, and anticipate compliance costs.

3.7.  To promote transparency and robust consultations before implementing TrCMs - while preserving current WTO notification requirements - Members are encouraged to consider ways to better enhance the identification of notified measures and to improve transparency for those TrCMs not currently subject to such requirements.

3.8.  Members are encouraged to provide sufficient opportunities for both domestic and international stakeholders to submit feedback and have their views meaningfully considered during the development of measures. In addition, Members are encouraged to, without discrimination, allow reasonable time for relevant stakeholders to prepare for the implementation of measures whenever such measures are revised or changed.

4  Way Forward

4.1.  With a view to developing inclusive and multilateral approaches, we propose intensifying practical discussions in the WTO CTE, in collaboration with other relevant committees, including the WTO TBT Committee. While considering discussions within other international organizations, such as the Organization for Economic Co-operation and Development Inclusive Forum on Carbon Mitigation Approaches (OECD IFCMA) and the International Organization for Standardization (ISO), we should focus on practical outcomes that yield tangible benefits for global trade and industries.

4.2.  Furthermore, to promote inclusive trade-related climate action, discussions on trade, environment and capacity-building within the CTE, together with relevant WTO bodies, should be enhanced. This could include capacity-building and knowledge sharing efforts to support mutual understanding among Members with respect to TrCMs, while taking into account the perspectives expressed by LDCs (_WT/CTE/W/266).

4.3.  Ahead of the 14th WTO Ministerial Conference (MC14), we hope to deliver concrete outcomes, such as inclusive and multilateral approaches for TrCMs. By strengthening cooperation and shared goals, the WTO can play a critical role in achieving sustainable prosperity and inclusive growth. We stand ready to constructively engage with all WTO Members on this journey.

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