Collision course: free trade’s free ride on the global climate

Economic activity can cause environmental degradation, it is clear. But just how great is the impact of international trade on the global environment? This study focuses on the extent to which the transportation of goods around the world increases greenhouse gases and leads directly to climate change.

Globalisation means increasing international trade and with it a vast increase in freight transport. Recent research forecasts that between 1990 and 2010, greenhouse gas emissions from transport will rise by 39 percent. This study points out that this conflicts with existing agreements to cut emissions and asks what governments should be doing about it.

At the UN convention on climate change in Kyoto, industrialised countries agreed to cut their greenhouse gas emissions by 5.2 percent. Scientists now advise that the cuts should actually be 60-80 percent. Yet trade and transport figures show that worldwide carbon emissions will continue to rise during the period of the Kyoto agreement. Behind these figures, this report reveals a fundamental clash between (1) World Trade Organisation (WTO) rules and the various multilateral environmental agreements and (2) economic growth and liberalisation and attempts to control global warming. According to the research, there is still no mechanism to resolve these clashes, or to decide which agreements take priority.

The following points indicate that there is a direct link between global warming and trade, particularly the transportation of goods:

• Trade forms a growing share of all global economic activity.
• Greenhouse gas emissions from transport are one of the fastest growing contributors to climate change.
• Road freight and aviation are the most polluting and they are increasing dramatically.
• Emissions from international freight are (1) untaxed and (2) excluded from the Kyoto targets for national greenhouse gas reduction.
• Rich countries are increasingly dependent on fossil fuels, generating carbon dioxide at many times the sustainable rate.
• Poor countries are not achieving human development through trade, even in conventional economic terms.

In the face of these facts, the report suggests that governments should:

• bring international freight transport under tax regimes and into the agreed national targets for greenhouse gas reduction
• raise the price of fuel to include its full social and environmental costs
• give priority to international environmental commitments over trade liberalisation agreements
• reduce unnecessary freight by using subsidiarity as a guiding principle to organise trade, production and distribution, and by directly encouraging production and consumption of local goods and services
• restructure government subsidies to support small and local enterprises instead of those which are large and remote
• acknowledge that rich countries have a ‘carbon debt’ due to over-consumption of fossil fuels
• accept that everyone has an equal right to the atmosphere, and change the policy framework for tackling global warming accordingly.

Source(s):
‘Collision Course: Free trade’s free ride on the global climate’, New Economics Foundation by Andrew Simms, 2000 online at Full document.

id21 Research Highlight: 8 November 2002

Further Information:
Andrew Simms
New Economics Foundation
Cinnamon House
6-8 Cole Street
London SE1 4YH
UK

Tel: +44 (0) 207407 7447
Fax: +44 (0) 20 7407 6473
Contact the contributor: andrew.simms@neweconomics.org

New Economics Foundation (NEF), UK

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