Economic Feasibility and Legal Security for Sustainable Trade?
Christian Häberli, WTI | 30 September 2024
My question to you: Can we ensure that more sustainable food products get market access?
What we see are ever-increasing requirements for greener production and greener trade. The EU, for instance, wants its own manufacturers and farmers to produce more climate-friendly, and without impairing natural resources. What is called the European Green Deal is, in fact, a train of over fifty measures on the way to climate neutrality (“Fit for 55”).
But when you (have to) take this train, do you want to lose market shares? Can you accept competition from less green products (“eco-dumping”), without due diligence? Products originating from deforested areas, or made by forced labor? And what if import tariffs for these products have been negotiated away in trade agreements by the European Commission? (Against low or zero tariffs for your formerly non-green exports? Will the new production requirements imperil those exports and you go broke?) By the way, tariffs are not the main problem. Greener trade is trade with a lesser footprint: less (fossil) fuels for producers, processors, and transporters; no more non-green inputs, and more “due diligence” ensuring compliance by your suppliers along the value chain.
Now, do you take your fuel-driven car or your tractor for a big riot at the European Commission’s Headquarters in Brussels? Or do you tell your lobbyists to stop the bureaucratic red tape built into greener trade, and making your output too expensive? And who pays for all of that?
Carbon taxation is one brilliant idea welcomed by almost all economists. The scheme adopted by the EU is called Carbon Border Adjustment Measures, in Eurospeak, CBAM. Starting in 2026, your non-European competitors will have to buy “emission certificates” supposed to be equivalent to your added production costs. No standards, no equivalence agreements, no results from the OECD and World Bank discussions. Never mind the cost (for your competitors).
But if you discriminate “like products” you can get a ton of WTO problems – even if you claim your carbon taxes are an obligation under the Paris Climate Agreement. Not to mention the impact on developing countries and small and vulnerable producer groups everywhere that the bureaucrats hardly ever bothered to study.
In our MATS project we focus on precisely these countries, markets and producers. Bottom up, product by product, or region by region. Each of our 15 case studies has made numerous change proposals for the whole value chain, starting and ending with policymakers and regulators. We want them discussed and implemented!
Stay put – or come to our final project meeting in Brussels, on 19 and 20 November 2024
Christian Häberli has been a Fellow of the World Trade Institute (WTI/Berne University, Switzerland) since 2007 and is a lecturer and a consultant for scientific research and outreach activities. He has produced over 70 publications on trade and investment issues related to agriculture, food security and food safety, obesity and malnutrition, water, climate change, employment, multilateral and regional trade, and development. For more info about WTI activities here.