Sustainable Trade and the WTO: The Compliance Dilemma

Abstract

International trade, often prioritizing competitiveness, clashes with the need for climate action, particularly impacting developing countries reliant on trade. This paper examines the "compliance dilemma" - the struggle to implement climate-mitigating policies without harming these economies. While the WTO aims to incorporate sustainable development, the paper argues that current provisions within the WTO and GATT Agreements are insufficient and often lead to negative economic consequences for developing nations. For example, the EU's Carbon Border Adjustment Mechanism (CBAM), designed to reduce emissions, could harm exports from developing countries. The paper proposes establishing a WTO International Law Compliance Commission (WILCC) to align WTO rules with international law, address exploitable loopholes in trade agreements, and harmonize trade and environmental policies in collaboration with the UNFCCC. This framework seeks to ensure trade supports both climate action and sustainable economic growth for all stakeholders.