This Note is an exploration of the patterns of trade in the coming decade, based upon a review of literature. It establishes possible connections with another stream of literature, which points to the contribution of trade to CO2 emissions. By connecting these two streams, it aims to map out the possible enablers and obstacles that the future of trade could place on the transition towards the Paris Climate Agreement’s overarching objectives.
Literature shows that the technique effect reflects the principal avenue through which trade opening can help mitigate climate change. On this premise, diplomatic efforts have focused at the WTO on increasing access to the best available low carbon technologies–without much success as no agreement on such goods and related services could be concluded thus far. On their side, free trade agreements (FTAs) to date have not been crafted from this particular perspective either. Moreover, it is worth reminding that increasing the availability of goods, services and technologies that are likely to be important in mitigating GHG emissions is not just about the liberalisation of environmental goods and services. Investing in the production of the much needed goods and technologies for decarbonisation, creating lead markets to make a business case of technologies not matured yet, are also of critical importance. In its 2022 report, Working Group III of the United Nations’ Intergovernmental Panel on Climate Change (IPCC) expressed concern that much of international governance still promotes fossil fuels and highlighted the role of investment treaties and investor-state dispute settlement. Hitherto, investment law and climate change law have stood side by side, van Aaken and Broude (2022) acknowledged, leaving the potential of technique effect largely untapped. The conclusion is that climate investment provisions, chapters and treaties seem the missing pieces of the trade and climate governance puzzle.