WORLDTRADE ORGANIZATION WORLDTRADEClimatechangeand internationaltrade REPORT2022 WhatistheWorld TheWorldTradeReportisan TradeReport?annualpublicationthataimsto deepenunderstandingabouttrendsintrade,tradepolicyissuesandthemultilateraltrading system. Whatisthe2022The2022WorldTradeReport Reportabout?exploresthecomplexinterlinkages betweenclimatechangeandinternationaltrade,revealinghowinternationaltradeandtraderules cancontributetoaddressing climatechange. FindoutmoreWebsite:www.wto.org Generalenquiries:enquiries@wto.orgTel:+41(0)227395111 Coverimage: Kamarjani,Bangladesh Technicianstravelwiththeirequipmentbyrickshawtoinstallasolarpowersystemataruralhouse builtonKharzanirChor,anislandontheJamunaRiver.Theseislandscomeandgooveraperiodofaround1oto2oyearsandthusconnectingthemtothenatlonalgridisimpractical.However. aprogrammeofruralelectrificationisbeingrolledoutusingsolarpanelsandbatteriesinstalled atindividualhomes. @LaurentWeyl/Argos/PanosPictures CONTENTS Contents Acknowledgementsanddisclaimer2 6 Abbreviations4 ForewordbytheWTODirector-General Keymessages8 Executivesummary9 Introduction16 1.Thenextgreattransformation18 2.Harnessingthetransformativepoweroftrade20 3.Overviewofthereport23 B.Theroleoftradeinadaptingtoclimatechange26 1.Introduction28 2.Whydoesclimatechangeadaptationmatter?28 Internationaltradeandtradepolicycansupportclimatechangeadaptationstrategies34 4.Internationalcooperationisessentialtoassistcountriesinadaptingtoclimatechange39 5.Conclusion47 Thetradeimplicationsofalow-carboneconomy50 1.Introduction52 2.Achievingalow-carboneconomyisanimperativebutfaceschallenge852 3. Alow-carboneconomywouldchangetradepatternsandprovidenewtradingopportunities57 4.Internationalcooperationisessentialtoachievealow-carboneconomy65 5.Conclusion74 D.Carbonpricingandinternationaltrade78 1.Introduction80 2. Carbonpricingpoliciescanbeanimportantstrategytoreducecarbonemissions80 Uncoordinatedcarbonpricingpoliciesmayundermineclimateactionandleadtotradetensions 85 Greaterinternationalcooperationisrequiredtoadvanceambitiouscarbonpricingpolicies 06 Conclusion 94 3. 4. 5. E.Thedecarbonizationofinternationaltrade98 1.Introduction100 3. 2.Accountingforcarbonemissionsoriginatingfrominternationaltradeiscomplex100 Internationaltradeaffectscarbonemissionsinmultipleways,bothpositiveandnegative102 4. Reducingtrade-relatedcarbonemissionsrequiresgreaterinternationalcooperation106 5.Conclusion112 Thecontributionoftradeinenvironmentalgoodsandservices116 1.Introduction118 2.Thereisscopeforintensifyingtradeinenvironmentalgoodsandservices118 3.Tradeinenvironmentalgoodsandservicescancontributetoclimatechangemitigation123 4.Thedevelopmentanddeploymentofenvironmentalgoodsandservicesrequire greaterinternationalcooperation127 5.Conclusion131 Gi.Conclusion134 Opinionpieces DanaeKyriakopoulou,"Climateinaction:implicationsforinternationaltrade30 GauriSingh,'Greenhydrogenrequiresanappetiteforaction*60 DanielC.Esty,*TradeimplicationsofGHGpricing"92 SophiePunte,*Buildingmomentumforzero-emissionsfreightmovement'110 Bibliography136 1 WORLDTRADEREPORT2022 Acknowledgements TheWorldTradeReport2022waspreparedunder thegeneralresponsibilityandguidanceofAnabelGonzalezandJean-MariePaugam,WTODeputy withMustaphaSadniJallabandwithsupportfrom SandraRossieroftheKnowledgeandInformationManagement,AcademicOutreachandWTOChairs Directors-General,andwascoordinatedbyJose- ProgrammeDivision:SoledadAguilar(LatinAmerican AntonioMonteiroandAnkaiXu. FacultyofSocialSciences),OsmanGulseven(Sultan QaboosUniversity),NadaHazem,MyriamRamzyand Director-GeneralNgoziOkonjo-lweala, Chefde ChahirZaki(CairoUniversity),SufianJusoh(National CabinetBrightOkogu,YuvanBeejadhurandTrineesh UniversityofMalaysia),ZhangLeiandJiangYue BiswasfromtheOfficeoftheDirector-General, (UniversityofInternationalBusinessandEconomics), RobertKoopman,formerDirectoroftheEconomic ThutoLucyMatobo(NationalUniversityofLesotho) ResearchandStatisticsDivision,andAikHoeLim, andBoopenSeetanah(UniversityofMauritius). DirectoroftheTradeandEnvironmentDivision, providedvaluableadviceandguidance. ThefollowingiindividualsfromoutsidetheWTO Secretariatalsoprovidedusefulcommentson TheleadauthorsofthereportareMarcBacchetta, earlydraftsofthereport:RolandoAvendano, EddyBekkers,CosimoBeverelli,MateoFerrero, MagnusBenzie,ChadBown,PaulBrenton,Vicky EmmanuelleGanne,RainerLanz,Jose-Antonio Chemutai,BrianR.Copeland,RobDellink,Klaus Monteiro,RobertaPiermartini,DanielRamosand Desmet,YannDuval,KoffiAseyeMakafuiElitcha, AnkaiXu.OtherauthorsareAbsarAli,Antonia Carzaniga,SvetlanaChobanova, Lory 'snun] RobertJ.R.Elliott,DanielC.Esty,MarcoFugazza, lanDouglasGllson,ChristienGollier,Jean-Marie JonathanHepburn,ThomasKréuchi,JuneyoungLee, Grether,StephaneHallegatte,KatyHarris,Dirk KathrynLundquist,SajalMathur,HanhNguyen,Yve8 Heine,BernardHoekman,MichaelJakob,Eujin Renouf,VictorStolzenburg,EnxhiTresa,AyseNihal Jung,StephenKaringi,AlexanderKasterine,Alexey Yilmaz,KhadijaZaidiandRuosiZhang- Kravchenko,VesileKulacoglu,BrunoLanz,JiaLi,JeremyLucchetti,