IISD - Liberalization of Trade in Environmental Goods for Climate Change Mitigation: The Sustainable Development Context

Trade is an important channel for the diffusion of climate mitigation goods. Lowering trade barriers brings their prices closer to world market prices, making them more affordable to consumers (industry and households) and bringing down climate mitigation costs overall. Lowering tariffs on climate mitigation goods can also contribute to UNFCCC technology transfer mandates by facilitating access to these goods. • Trade barriers can be lowered autonomously. More importantly, countries can engage in multilateral, regional or bilateral trade negotiations to lower barriers with binding commitments. • Trade liberalization is only one of a range of factors—including GDP, FDI, environmental regulatory frameworks and technical assistance—that affect actual trade in and diffusion of climate mitigation goods. Fiscal incentives, investment frameworks and intellectual property-related costs also determine access to, and affordability of, climate mitigation technologies. The impact of trade liberalization for climate change mitigation efforts will only be as effective as the broader enabling framework within which it is put into play.