On 22 July 2021, the House of Commons International Trade Committee ("ITC") launched an inquiry targeting the international trade aspects of COP26 ("Trade Inquiry").
In recent weeks, the UK Government has been keen to emphasise the potential opportunities to use international trade to further environmental goals through the promotion of 'green trade,' following the Board of Trade issuing a new report on 21 July 2021 setting out the "the economic case for green trade and the opportunity for Global Britain to accelerate the global green transition by promoting free and fair green trade" (the "Green Trade Report").
The Trade Inquiry has been tasked with considering how international trade and investment are being considered as part of the COP26 agenda, and how the Government’s trade and investment priorities align with its objectives for COP26.
While the Government does not offer any definition of "green trade", several elements to a green trade policy can be drawn out of the report, including the following:
- Trade policy can encourage the development and uptake of environmentally preferable goods, services, and technologies by improving cross-border access, creating favourable conditions for innovation by offering grants or tax incentives, reducing tariff and non-tariff barriers to trade in green goods and services, and increasing competition in the market which in turn promotes efficient production and accessible pricing;
- climate change threatens trade patterns, in ways ranging from reduced availability of food to difficulties experienced by economies currently reliant on high-carbon exports such as steel or cement. Trade policy decisions can take account of these actual or potential harms and direct the market accordingly; and
- green finance is an essential piece of the green transition, and investments should be channelled towards sustainable investments, and the report underlines the value of the UK's strong financial sector and desire to implement green financial standards.