Green Economy: Trade and Sustainable Development Implications

1. Green Economy: Trade and Sustainable Development Implications Lucas Assunção Head of Branch Trade, Environment, Climate Change and Sustainable Development UNCTAD Green Economy Session African Development Forum, Addis Ababa 13 October 2010

2. Green Economy and sustainable development • Stockholm Conference 1972 laid foundation of the sustainable development (SD) concept, which simultaneously addresses theeconomic, social and environmentallysound development imperatives, then UNCED92, WSSD02, UNCSD12 • GE should result in improved human well-being and reduced inequalities, while not exposing future generations to significant environmental risks and ecological scarcities. It is, therefore, an enabling component of the overarching SD goal • Potential Friction: Emphasis of traditional development is on economic growth, while emphasis of GE is on the environmental pillar of SD. The former not sustainable, while the latter a novelty. Constructive doubt prevails….

3. Trade and sustainable development • Trade by itself is not intrinsically good or bad for SD; depends on scale effects, composition effects and technology deployed, as well as on the distribution of benefits in the society • Sustainable trade is more than the liberalization of environmental goods and services (EGS) • It is not only about trading green goods and services, sustainable trade is about ensuring that trade positively contributes to a more leveled valuation among economic, social, and environmental development objectives

4. Transition towards a Green Economy • GE concept emerged post 2008 crisis as a potential new development engine • The green economy might have trade and sustainable development implications. Key doubts: Does it mean steady zero growth? Does it assume higher income and employment levels? Which sectors stand to win or to lose? Door to Green protectionism? Standards? Actionable subsidies at WTO? • Several developing countries still do not perceive the green economy as intrinsically sustainable; nor is it considered automatically pro-development or pro-poor . • Urgent need for a policy-relevant work to ensure paths to GE are socially inclusive and contribute to economic and social development

5. Export-led growth versus growth under the green economy • Export-led development strategy assumes that there is an infinite and unlimited demand for exports particularly from developing countries • Developing countries continue to rely heavily on the exports of primary commodities. Only exception are the BASIC countries – Brazil, South Africa, India, and China – with a shift towards a greater share of exports of manufactured goods • Trade data shows BASIC countries with reduced reliance on primary commodity exports and significant increase in manufacturing exports. • A global trade system focusing on SD should foster inclusion of all economic actors and seek social and environmental benefits, leading to a system not solely based on the principle of commercial reciprocity but on the search for global SD solutions for global commons issues (CC)

6. Challenges for a green economy • GE means mainstreaming green sectors of economy, changing consumption patterns and internalizing environmental costs • Implies significant new investments to (i) structurally change the production function of the economy, (ii) transform infrastructure, and (iii) spur investments for continuous technology development • The SD challenge is to be able to produce more wealth, employment and better social services, coupled with a lower absolute use of natural resources, greater reliance on less carbon-intensive and renewable energy, and without causing regional displacements due to uneven endowment of natural resources • Both SD and GE require well-targeted policies to address market failures (CC) and bolder and more ambitious public policy response that would speed up the transitioning to GE

7. Concluding remarks • Trade is an important tool in a strategy leading to sustainable development. Trade should “grease” the wheel of a GE and move to a GE should not “clog” channels of trade. • Export-led growth strategy alone will not automatically provide incentives to developing countries to move towards GE and SD • Need for an integrated approach to economic growth and SD, defining what role should trade and trade rules play in the transition to a GE • Prospects for a GE to become basis for a new development push will depend on how its benefits are perceived and how the burden of the transition costs is ultimately shared (climate finance is essential!!) • Illustrative real cases of spending wisely towards a GE would help • UNCTAD Expert Meeting on The Green Economy: Trade and Sustainable Development Implications, 7-8 October 2010, Geneva, Switzerland and publication on the green economy late 2010

8. Thank you lucas.assuncao@unctad.org www.unctad.org/climatechange