The FT writes, rich countries are using the green transition as an excuse to boost their own economies at the expense of developing ones, exploiting outdated World Trade Organization rules….
Our Take, Doug Sheridan
The FT writes, rich countries are using the green transition as an excuse to boost their own economies at the expense of developing ones, exploiting outdated World Trade Organization rules, according to the UN’s trade chief.
“Many trade rules forbid policies that can be used by developing countries. And the developed countries have more fiscal space to subsidise in the areas that are good for ‘quote, unquote’, the environment,” Rebeca Grynspan, sec-gen of the United Nations Conference on Trade and Development, says.
She said the int'l trading system was no longer working for the poorest. “Trade and investment have been the two pillars for developing countries to really go on to a path of dynamic growth. And now it will be as important for dynamic, sustainable growth,” she said.
They now face two big problems, locked out of markets by the fast pace of technological change and new barriers in rich countries. “The least digitally prepared countries are falling farther behind in digital,” said Grynspan.
“The other problem is that industrial policy is back, but especially in the most developed countries. And so that could affect developing countries’ ability to compete.”
The US has enacted the landmark IRA with $369bn of subsidies and tax breaks for domestically produced goods such as EVs. The EU has responded in kind with increased subsidies and policies to stimulate production of silicon chips, critical minerals and green technology.
“Developing countries see a lot of these policies as protectionist. They don’t have the fiscal space to go the path of subsidies, so they have to go the path of restrictions to trade or even duties or taxes,” she said.
She also attacked the EU’s new green rules banning imports from deforested land as too punitive. “If you only punish the population and don’t help them have a sustainable income from a sustainable forest... what is the way forward?”
The EU tax on imports of steel, cement and other carbon intensive products, the carbon border adjustment mechanism, was also iniquitous because it was based on developing countries paying the same carbon price as European Union ones, she said.
Under the Paris Agreement to cut emissions, countries that had historically emitted more agreed to bear a bigger burden of the costs than developing nations. “The whole issue of common but differentiated responsibility has been marginalised,” said Grynspan.
Our Take: Are we witnessing the unraveling of decades of progress on int'l trade, all in the name of climate change... and at the expense of the world's poorer nations and their futures?