Unlock Editor's Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Rich countries are using the green transition as an excuse to boost their economies at the expense of developing countries and exploit outdated World Trade Organization rules, the United Nations trade chief says.
“Many trade rules prohibit policies available to developing countries. And developed countries have more fiscal space to subsidize areas that are good for the environment and quote unquote.” Council for Trade and Development Secretary-General Rebecca Grinspan said in an interview with the Financial Times.
She said the international trading system that has enabled countries like South Korea and her native Costa Rica to develop is no longer working for the poorest people.
“Trade and investment have been the twin pillars for developing countries to move forward on a path to truly dynamic growth. And now they will become just as important for dynamic and sustainable growth,” she said. said.
But they now face two major challenges: rapid technological change and new barriers in rich countries that keep them out of the market.
“The countries least prepared to go digital are falling further behind in digitalisation,” Grinspun said.
“Another problem is that industrial policy is coming back, especially in developed countries. And that could affect the ability of developing countries to compete.”
The United States has enacted a landmark anti-inflation law that includes $369 billion in subsidies and tax breaks for domestic products such as electric cars. The EU has responded similarly with increased subsidies and policies to stimulate production of silicon chips, critical minerals and green technologies.
“Developing countries view many of these policies as protectionist. They cannot afford to go down the subsidy path, so they have to go down the path of trade restrictions and even tariffs and taxes. No,” she said.
Mr Grinspan attacked the EU for taking Indonesia to the WTO over restrictions on nickel exports and requirements for local processing of the ore.
He said Jakarta wants to move up the value chain by manufacturing products from nickel.
“They don't want to export in raw form, they want to export with added value. So they went to WTO arbitration. That's exactly what they lost in the first instance. “Because global trade rules are not coordinated,” she said.
He said the Trade-Related Investment Measures Agreement should be reformed.
Jakarta has appealed, but the case has stalled because the United States has blocked the establishment of a WTO appellate body. The EU is considering imposing tariffs and other enforcement measures on Indonesian products.
It creates a “chaotic system” in which richer and larger countries have more power.
She also attacked the EU's new environmental rules banning imports from deforested land as being too punitive. She said: “If we are only going to punish people and not help them earn a sustainable income from sustainable forests…what is the way forward?”
He said the Carbon Border Adjustment Mechanism, Brussels' tax on imports of steel, cement and other carbon-intensive products, was also unlawful because it was based on developing countries paying the same carbon price as EU countries. .
The 2015 Paris Agreement, aimed at reducing greenhouse gas emissions, agreed to make historically high-emitting countries bear a greater burden of costs than developing countries.
“The whole issue of common but differentiated responsibilities has been marginalized,” Grinspun said. “Paris is not something you can choose from a restaurant menu. It was an integral part of the deal.”
