China’s International Role in Navigating the Climate–Trade Nexus
Summary
China's climate–trade diplomacy is crucial amid geopolitical uncertainty, as climate change measures and policies intersect with international trade. Conventional wisdom suggests that trade and limiting global temperature rise to 1.5°C are in conflict due to differing aims. However, it is becoming evident that economic and environmental factors are interdependent, and success in one requires complementary action in the other.
Key Points
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Interdependence of Climate and Trade
- Climate change measures and policies can be compatible with economic growth and human development.
- Trade agreements and rules that reflect climate and sustainability concerns can integrate environmental protection and economic growth.
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EU-China Comprehensive Agreement on Investment (CAI)
- The CAI, agreed in December 2020 after seven years of negotiations, is the most ambitious agreement China has ever concluded with a third party.
- It marks the first time China has agreed to ambitious provisions on sustainable development in a trade agreement.
- Ratification and implementation could set a positive precedent for other countries and international actors.
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Multilateral and Plurilateral Initiatives
- World Trade Organization (WTO): China should invigorate discussions under the Structured Discussions on Trade and Environmental Sustainability (TESSD).
- Environmental Goods Agreement (EGA): China should revive and facilitate negotiations that commenced in 2014.
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Bilateral Opportunities
- Seizing the climate–trade opportunity could enhance climate cooperation.
- It could also drive progress in China–US relations, the world's most consequential international relationship.
By fostering synergies between trade policy and climate commitments, China can play a leading role in enhancing trade and climate synergies through various levels of international cooperation.