Dialogos Futuro Sustentável

DESCARBONIZAÇÃO DE TRANSPORTES

DIALOGUE 10

CLIMATE CHANGE AND FREE TRADE

Reflections on how climate change has been impacting the debate on free trade.

Lutz Morgenstern

ENVIRONMENT AND CLIMATE ISSUES HAVE BECOME MORE AND MORE PRESENT IN TRADE AGREEMENTS, SUCH AS THE ONE BETWEEN THE EUROPEAN UNION AND THE SOUTHERN COMMON MARKET, CONCLUDED IN JULY 2019.

Speeches

WATCH THE VIDEOS

Internacional Encounter

Nacional Encounter

Closing Remarks

Interviews

Alice Amorim

Alvaro Cedeño Molinari

Sascha Muller-Kraenner

In the tenth edition of the Sustainable Future Dialogue series, promoted by Instituto Clima e Sociedade (iCS) and the German Embassy in Brazil, international trade experts, government representatives and civil society representatives gathered to discuss possible goal convergence between climate policy and trade agreements.

“An agreement of this scope — the most complete and dense to this day — in a very particular political moment for Brazil was, logically, very controversial. But trade agreements aren’t bad in and of themselves. Trade is the oldest activity in history. What we need is to consider what kind of trade agreement we want, so that it is compatible with our current climate challenges.”

Ana Toni

Executive director at Instituto Clima e Sociedade (iCS)

Lutz Morgenstern, First Secretary for Environmental Matters from the German Embassy in Brazil, explained that climate change and free trade agendas were seen as opposed to each other. However, he says that questions from different sectors of society around the implications of the trade agreement between the Southern Common Market and the European Union show that these issues cannot be discussed separately.

“Different audiences question the consequences of the environmental agreement. Therefore, we need specific regulations to guarantee environmental protection and the fight against climate change. Thus, it’s important to promote broad debates on how these regulations can be implemented.”

Lutz Morgenstern

First Secretary for Environmental Matters from the German Embassy in Brazil.

Specialist Cathrin Zengerling, from the Albert-Ludwigs University of Freiburg, gave an overview of the ways in which environmental and sustainability issues have been considered in international trade agreements. She explained that the Free Trade Agreement between the Southern Common Market and the European Union dedicates its sixth chapter to maintaining the climate commitments made in the Paris Agreements and its eight chapter to forest protection, as well as mentioning the Sustainable Development Goals.

Another innovation in the Free Trade Agreement between the Southern Common Market and the European Union, according to Cathrin, is that it defines a deadline for conflict resolution and creates a framework for soliciting consultation in the case of socioenvironmental conditions non-compliance, and not only anti-competitive practices, as is the norm in these trade agreements.

“Discussion around climate change wasn’t present at the WTO and in the liberalization of investment regimes by countries. In the Southern Common Market–EU agreement, we see this integration. Therefore, the existence of chapters dedicated to climate change, forest protection and promoting Sustainable Development Goals can be considered progress. However, the weak or inefficient implementation of these requirements is a concern, as well as the possibility of perpetrating an unsustainable consumerist pattern in trade processes, due to this agreement.”

Cathrin Zengerling

Albert-Ludwigs University of Freiburg

FREE TRADE PROS AND CONS

Free trade is a market model that allows for the free circulation of goods with reduced tariffs, as a result of mutual agreements between countries.

Yana Dumaresq, Special Adjunct Secretary for Foreign Trade and International Matters at the Brazilian Ministry of Economics, recalled the benefits of free trade according to economical theory. She explained that the first major benefit of free trade is possible specialization through comparative advantages for returns to scale. Therefore, as trade is free, countries can focus on their most-competitive areas. The second major benefit of free trade is precisely updates in technology, know-how and standards.

“The agenda for opening the economy and joining the International trade is a strategy for Brazilian convergence with best international practices. This agenda has a tariff component, leading to an increase in supply and demand. But, above all, the 21st century trade agenda is a non-tariff agenda. It’s a standard agenda.”

Yana Dumaresq

Special Adjunct Secretary for Foreign Trade and International Matters at the Brazilian Ministry of Economics

Gilson Spanemberg, Fellow Researcher at Global Urban Development (GUD), reported his experience working at the Brazilian Trade and Investment Promotion Agency (Apex). According to him, the agency realized it was important to open up the debate around making new deals in the scenario of a transition to a low-carbon economy.

“We realized it was necessary to empower Brazilian businesses to access new markets and insert their products and services in global value chains, meeting the sustainable requirements demanded by some more advanced markets.”

Gilson Spanemberg

Fellow Researcher at Global Urban Development (GUD)

Costa Rica is a success case: a country that was able to diversify and grow its economy, with environmental and social benefits, through the signing of free trade agreements. In the 1980s, in a moment marked by turbulence and instability in Central America, when many neighboring countries were in civil war, Costa Rica, whose economy up tot that point was mainly agricultural, began to negotiate international trade agreements. As a result, the country was able to attract new businesses, developing industrial technology, manufacturing, digital and medical equipment clusters. In the 1980s, agriculture accounted for 80% of the country's economy. Now, services are 50%, industry is 40% and knowledge economy accounts for 10%.

“Costa Rica is an example that shows the possibility of economical and ecological growth. In the last twenty years, our economy grew seven times its original size and we were able to double the country’s vegetal cover, as well as attaining a 99% renewable energy mix.”

Alvaro Cedeño Molinari

Representante da Costa Rica junto à Organização Mundial do Comércio (OMC)

IMPLEMENTATION CHALLENGES

However, the escalation of climate change challenges free trade agendas, since globalization intensified global trade flows. It came accompanied by an increase in greenhouse gas emission associated to a redistribution of production and good transportation in a global scope. According to Carbon Trust, approximately 25% of all CO2 emissions from human activities are imported or exported between countries.

Thus, there are concerns that free trade agreements could escalate the climate crisis, since they can contribute with the demand for goods with high carbon and ecological footprints.

In the case of the free trade agreement between the Southern Common Market and the European Union, meat, soy, coffee, liquor and tobacco are among the most-exported goods from southern to northern countries. On the other hand, European Union sells mainly vehicles and machinery, pharmaceuticals and chemicals and transportation equipments to the Southern Common Market.

According to Sascha Müller-Kraenner, executive director and CEO at Deutsche Umwelthilfe, a German consumer organization focused on environmental issues, it has always been assumed that the solution for global wellbeing and for sustainability would be found in a well-regulated multilateral system based on agreements built through multilateral organizations.

“We’re looking for a global governance system based on the rule of law. However, the last few years gave rise to doubts over our priorities and interests in this system. There are cracks in the consensus that trade is always positive. Many issues being raised about the environment and consumer rights.”

Sascha Müller-Kraenner

Executive director and CEO at Deutsche Umwelthilfe

How far can we increase the trade of grain and agricultural goods, such as soy, ethanol, beef and derivatives, between the Southern Common Market and the European Union without increasing emissions and causing more socioenvironmental impact? That was the issue raised by Maureen Santos, coordinator of the Environmental and Social Justice Program at the Heinrich Böll Foundation in Brazil.

She presented data from a recent Grain study to shed some light on this issue. Considering the current volumes of exports from the main Southern Common Market commodities to Europe and a projected increase in these trade flows since the free trade agreement confirmation, there’s a significant increase in emission. The global trade flows of beef are particularly attention-grabbing: according to the study’s estimation, they will present an additional emission increase of 82%. Poultry exports show wan increase of 55%.

Maureen also highlighted the concern regarding the closing or reduction of civil society acting spaces in the process of building and implementing the trade agreement between the Southern Common Market and the European Union.

“Here in Brazil, there isn’t a formal space where civil society can present its questions for this debate, which differs from what has been happening in some European countries, where the public debate is much broader. We need to predict participation spaces to bring the necessary transparency not only in crafting the agreement, but also when implementing it.”

Maureen Santos

Coordinator of the Environmental and Social Justice Program at the Heinrich Böll Foundation in Brazil

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