How we can trade better

Whether it’s rare metals to make the batteries in our phones and electric cars, or biodiesel to power our cars and trucks, what we choose to import has an impact on the planet, the environment and people’s well-being. As the world’s largest trading bloc, the EU has an opportunity to ensure that it’s trade is sustainable. That’s why T&E pushes the EU’s dealmakers to sign agreements that set a ‘gold standard’ for how the world should trade.

Right now EU trade agreements do contain environmental and sustainability provisions, but there are practically no ways to enforce them and tackle breaches. When, last year, the EU trade commissioner announced she wanted to make sustainable development chapters in trade agreements more effective, T&E became a vital voice in the debate – calling for infringements of environmental provisions to be subject to the same state-to-state dispute settlement as violations of commercial clauses.

Take biofuels, for example. A free trade agreement between the EU and the Mercosur countries – talks over which are ongoing – could undermine the EU’s goal to stop consuming unsustainable biofuels in transport. T&E has been quick to highlight how the removal of trade barriers in energy and raw materials could lead to an increase in imports of unsustainable biodiesel from Argentina, if effective sustainability safeguards are not put in place. T&E is pushing for coherence in EU trade and climate policies.

Level the playing field

The EU should also use its trade heft to level the playing field between companies in countries taking action on climate change and those in countries that are not. One way T&E has proposed to do this is by the EU levying special import fees in the form of a carbon border tax adjustment. It would be based on the price of carbon – in existing carbon markets such as the EU emissions trading system – and should be levied on goods and services from countries which do not put an equivalent price on carbon. The idea has been gathering momentum with French president Emmanuel Macron telling the COP climate conference in Bonn that Europe needs a floor price on carbon – accompanied by ‘a border tax that will also protect our economic sectors against imports from countries that do not respect the same objectives and decide not to engage in this environmental transition.’

As well as opportunities to enhance environmental protections as a trade bloc, the EU is also facing a challenge to its environmental standards and climate regulation in the form of Brexit. As the UK leaves the EU, it is becoming one of Europe’s biggest trading partners. T&E argues that the EU should make preferential access to the single market conditional on the UK agreeing to respect EU environmental standards and climate targets after Brexit. The UK government must not be allowed to engage in “environmental dumping” to give Britain an edge over its EU trade partners.

“L'ONG bruxelloise Transport & Environment (T&E) estime que les compagnies aériennes britanniques devraient rester dans le système d'échange de quotas d'émissions de CO2 de l'UE (dit SEQE ou marché ETS selon son acronyme anglais) et continuer à suivre les règles régissant les aides d'État, dans un rapport.” Europe 1 Radio, 13 December 2017

T&E has met the EU’s ‘Article 50’ taskforce a number of times to press negotiators on Putting the Environment at the Heart of Brexit, as our paper is called. We are talking officials through Brexit’s potential impact on each area that T&E works on, starting with aviation. UK flights must abide by EU environmental rules after Brexit if Britain wants to the retain its current level of access to the European aviation market, our aviation paper argues. That means EU rules on the aviation emissions trading system (ETS) and state aid should continue to apply to the UK. This would maintain a check on aviation emissions and prevent increased UK subsidies for airport infrastructure and airlines which would be distortive and detrimental to the environment.