Trade
The ACCTS could be a catalyst for transitioning to a circular economy
Author: Giridharan Ramasubramanian, ANU
On 25 September 2019, five countries — Costa Rica, Fiji, Iceland, New Zealand and Norway — announced a new initiative, the Agreement on Climate Change, Trade and Sustainability (ACCTS) that provides a fresh opportunity to use trade agreements to tackle the challenges of climate change and sustainable development.
The agreement needs to do two things if it wishes to be an influential and effective international grouping. The ACCTS should facilitate the transition to a more circular economy among member countries and successfully shape discussions at the nexus between trade, climate and sustainable development in other international forums and institutions.
Policymakers who wish to mitigate climate change have started thinking about how their countries could make the transition from a linear to a circular economy. In a linear economy, resources are extracted and transformed into goods that are commercially exchanged and used before they are scrapped, leading to large amounts of waste. The circular economy involves using resources more efficiently across their life cycles by closing, extending and narrowing material loops that could decouple primary raw material consumption from economic growth. This will facilitate sustainable development by improving overall resource efficiency and lowering carbon emissions.
Currently, the ACCTS aims to provide legally binding policy action in three specific areas: elimination of tariffs on environmental goods and new commitments on environmental services; disciplinary measures to eliminate fossil fuel subsidies; and the development of guidelines for voluntary eco-labelling programs. This is a tangible start and successful implementation in these areas would show the efficacy of trade agreements in dealing with climate and sustainable development issues.
When the five states commence negotiations in early 2020 it is important for them to pay attention to the design of the ACCTS — an example of concerted open plurilateralism. A central idea behind this concept is that self-reinforcing cooperation can emerge within small groups of self-interested actors and feed into more comprehensive problem solving.
Negotiators working on the ACCTS describe it as a living agreement that could expand in membership, as other countries are brought on board, and expand in scope as new issues at the intersection of trade and climate are brought to the table. They have also characterised the ACCTS as a pathfinder that would provide an institutional template for future agreements that could shape the agendas in other climate and trade forums.
Two potential issues fall within the scope of the ACCTS: the removal of barriers to trade in secondary materials, goods and waste, and the development of guidelines for eco-design and recyclability standards. Export restrictions are often applied to the trade of secondary materials that prevent their circulation in new products. Environmentally stringent and consistent designs across borders will raise standards in individual countries and positively influence international production value chains that shape the design and manufacturing of many products. Progress in these two areas will help facilitate domestic attempts to transition to a circular economy.
In terms of expanding membership, countries such as Finland and the Netherlands have already started thinking seriously about transitioning to a circular economy and would be interested observers. More broadly, the European Union is seeking to incorporate climate provisions in its trade agreements, making it a ripe candidate to join. While larger developing countries such as China and India are using language associated with the circular economy, they have inhibited progress on climate-trade related issues in other forums in the past. Their eventual inclusion, along with other G20 countries, would have to be carefully negotiated.
The ACCTS could also drive momentum in other institutions. Long-standing efforts to reach an Environmental Goods Agreement in the World Trade Organization (WTO) have stalled but progress within the ACCTS could provide a model for renewed negotiations. Similarly, the G20 and the Friends of Fossil Fuel Subsidy Reform have sought to tackle fossil fuel subsidies with little success. Yet, this small group of countries could provide an alternative pathway in shaping progress on this issue. No intergovernmental agreement has attempted to establish codes and guidelines for eco-labels and the ACCTS offers a chance to do just that.
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Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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