WTO Chief Calls For Global Carbon Price, Reforms To Tariffs, Red Tape To Clean Supply Chains

A slew of urgent reforms to carbon pricing, import tariffs and regulatory issues are needed to decarbonise supply chains in time for the 2030 goals, said Ngozi Okonjo-Iweala, Director-General, World Trade Organisation (WTO).

While addressing the World Economic Forum’s annual meeting, she said because countries tend to impose higher tariffs on relatively clean finished goods, but lower tariffs on often more polluting inputs and intermediates, trade policy skews in favour of dirtier products.

She added that this results in an implicit subsidy for CO2 production of USD 550 billion to USD 800 billion per year. 

Eliminating this bias, Iweala added, would reduce global carbon emissions by 3.6 per cent while increasing global income by 0.65 per cent.

The Director-General said that there are at least 70 carbon pricing schemes worldwide, leading to uncertainty and concerns about competitiveness. The WTO is working with the World Bank, Organisation for Economic Co-operation and Development (OECD) and International Monetary Fund to streamline carbon pricing. 

“I remain convinced that a shared global carbon-pricing framework would best provide certainty for businesses and predictability for developing countries,” said Okonjo-Iweala.