While disruptions in the movement of goods, technologies, components, and people contribute to reduced emissions, they will also hurt green trade flows.
Lower emissions during the recovery process and in the longer term depend on whether behavioral changes as a result of COVID-19 and stimulus packages lead to structural changes that reduce emissions.
UNEP’s Environment and Trade Hub supports countries to use trade as a vehicle for sustainable development and resilience.
The UN Environment Programme (UNEP) Environment and Trade Hub has published a policy brief that addresses COVID-19 and its effects on international trade and the environment. Titled, ‘COVID-19: Implications for Trade and Environment,’ the brief acknowledges the unprecedented contraction that trade is experiencing due to the pandemic, and argues that a fast recovery depends on how long the epidemic lasts and the effectiveness of policy responses.
The World Trade Organization (WTO) expects world trade to fall by between 13% and 32% in 2020, and the UN Conference on Trade and Development (UNCTAD) estimates that global foreign direct investment could decrease by up to 40% during 2020-2021. Moreover, many countries have implemented COVID 19-related trade measures, especially for food stuffs and medical supplies exports, affecting supply chains and availability of food and medical supplies.
The brief explains that decreases in prices and investment will disrupt supply chains and trading patterns, while the International Monetary Fund (IMF) has confirmed a global recession, with: economic activity decreasing further and faster than during the 2008 global financial crisis; rapidly increasing unemployment; small and medium-sized enterprises (SMEs) going out of business; and economic uncertainty predicted to continue until at least the end of 2021.
In the long term, the post-COVID-19 recovery involves restructuring the global economy and trade system to make them more resilient.
In addition, the brief argues, while disruptions in the movement of goods, technologies, components, and people contribute to reduced emissions, they will also hurt green trade flows. Prior to the pandemic, for example, clean energy technologies and efforts to pursue low-carbon development paths were increasing, with the International Energy Agency (IEA) predicting that renewable energy capacity would expand by 50% between 2019 and 2024. However, oil price decreases threaten these advances and put pressure on renewable energy sources. Lower emissions during the recovery process and in the longer term depend on whether behavioral changes as a result of COVID-19, such as reduced air travel, and stimulus packages, lead to structural changes that reduce emissions.
The brief warns that trade governance reforms are uncertain, with environmental action at the WTO on hold, and a number of meetings to discuss such reforms, including greening trade and transitioning to a circular economy, postponed, including the WTO ministerial meeting in June 2020.
Regarding the post-COVID recovery and reconnecting economies and rebuilding a more resilient and environmentally sustainable trading system, the document suggests:
- incorporating sustainable development and climate resilience and preparedness into trade policies and governance, instead of focusing recovery measures on a return to “business as usual”;
- connecting economies for rapid response and facilitating the flow of goods and services for disaster relief;
- facilitating an increase in green trade and green investment flows;
- closing illegal and unregulated wildlife trade and markets to reduce the risk of future zoonotic epidemics;
- rebuilding sustainable food chains, promoting local trade, and boosting exports in sustainable produce; and
- helping developing countries build resilience and green their export sectors, through, for example, the WTO-led Aid for Trade initiative.
The brief also describes next steps and UNEP’s work in this area, noting that the post-COVID-19 recovery can be divided into two phases: in the near term, addressing the global economic crisis, with governments implementing stimulus packages and fiscal reforms and trade measures; and in the long term, restructuring the global economy and trade system to make them more resilient.
The brief highlights Environment and Trade Hub’s efforts, which support countries to use trade as a vehicle for sustainable development and resilience. It explains that UNEP can help countries pursue the SDGs and a green post-COVID recovery by, inter alia: enhancing their capacity to build climate resilience and realize trade opportunities as a result of the green economy transition; helping countries strengthen the sustainability aspects of trade agreements; and fostering dialogues and partnerships to raise awareness and advance the global agenda on trade, resilience, and the environment. [Publication: COVID-19: Implications for Trade and Environment]