How do trade deals affect the environment?

Government decisions impact upon the climate and ecological crises in multiple ways, and trade deals are one of them. From fair and sustainable supply chains to upholding high standards, campaigner Kierra Box explores what can be done to make trade deals environmentally friendly.
  Published:  24 Apr 2020    |      3 minute read

What do trade deals do?

Trade deals, agreed between two or more governments, set out the rules for trading between different countries. These include:

  • trying to make it easy for each side to let in the goods and services they need from one another
  • trying to make it harder for the goods and services they don’t want, or already make enough of, to be imported.

"Making it hard" can mean making the importing business pay to sell something in your country, by charging an import tariff. This makes it more expensive for a foreign business to get that product onto your market, and more expensive for people to buy – which means they’re likely to sell less.

It can also mean setting out standards for how things are made, by ruling out (or limiting) certain goods in your trade deal and refusing to let in products that don’t meet quality standards that can be checked at the border. What's more, it's the job of these standards to protect us from goods so cheap they’re dangerous to humans or the environment, or are just plain rubbish.

In theory, by keeping out a surplus of cheap products which are already made by producers at home, governments can support domestic industry – meaning jobs, profit and economic growth. And by letting in cheap goods which we don't produce, governments can make sure we have the option to buy a variety of products at the lowest possible price – victory for anyone who wants to eat an affordable tomato in the winter.

So, for the UK that might mean the government sets out charges to import eggs and apples (which we have plenty of), but makes it cheap to import mangoes and coffee beans. It might mean making it easy to import enough lamb for us to buy in the cold UK winters, but not so much that farmers can’t sell their lamb here in the spring and summer.

How can trade deals affect the environment?

Trade deals can also be used to protect consumers, for instance by banning beef treated with hormones, make-up that may contain traces of asbestos, or toys made with lead-based paint – until science shows these things aren’t harmful. Sounds great, doesn’t it?

Technically, it is great. But unfortunately trade agreements don't exist to protect our environment. They exist to make trade cheaper and easier, simplify rules between countries, ensure equal treatment is offered to different trade partners and that trade deals don’t interfere with domestic law-making (or vice versa).

Not only do trade agreements increase overall trade and related emissions and resource use, they can also lead to the lowering of standards and checks to the lowest common denominator, and discourage countries from demanding environmental requirements of their trading partners. They can give foreign businesses the power to sue governments for introducing new protections. Where environmental requirements are included in agreements, they are rarely enforceable – meaning that if one side fails to meet the requirements, there's rarely any punitive action taken.

For years, an emphasis on the end product – rather than how that product was made and what damage it caused – meant it was also hard for countries to use trade deals to restrict trade in products which damage our environment. And there's been a disappointing lack of leadership on the issue from "above". For example, the World Trade Organisation (WTO) has a history of low common standards, and upholding complaints against nations that introduce trading requirements for environmental reasons.

Trade, and trading agreements, have not only failed to support environmental aims – they've actively blocked nations from achieving them individually or working together more effectively.

Can trade deals be good for the environment?

The UK government has the power to tackle some of the negative effects of trade deals, and introduce environmentally-friendly measures at home and abroad, both through trading agreements and in our wider trade and foreign policy.

The term "net zero" refers to net zero carbon emissions.

Going net zero means removing as many emissions as we produce, which is vital if we’re to get a grip on climate breakdown. That means that as well as polluting less and holding big fossil fuel companies to account, we need to re-think how we use our land and natural resources.

The government's goal of net zero carbon emissions could be greatly helped by:

  • Only entering trade negotiations with nations signed up to a range of key international environmental agreements – including the Paris Accord – and making their operation conditional on partners complying with environmental obligations.

  • Carrying out Environmental Impact Assessments before entering into new agreements to identify and mitigate possible negative effects.

  • Ensuring that all agreements contain requirements for both sides to maintain environmental standards and strong protections for the right of all partners to increase standards.

  • Setting clear domestic import standards and incorporating these into trade agreements.

  • Making sure trade agreements support trade in goods and services which are environmentally beneficial.

  • Pushing for the WTO to increase common standards and update its approach to environmental protections.

  • Stopping funding the development of unsustainable industries abroad and supporting trading partners in the Global South to adopt climate positive strategies.

All this doesn't mean that trade is the solution to the climate and nature emergencies. But these actions would help to remove the barriers the current system puts in the way of environmental ambition, and start to chart a new path where trade benefits our planet.