World trade rules vital in countering climate change, USTR states

Industry News | | MIC Customs Solutions |

Global trade rules must be enforced strongly if the climate crisis is to be averted, USTR Katherine Tai has said.

New US Trade Representative (USTR) Katherine Tai has highlighted the importance of effective global trade rules in addressing environmental issues and countering climate change.

Speaking publicly for the first time since her confirmation at a Center for American Progress event titled "Greening US Trade Policy," Ms Tai emphasized that protecting the planet will be a top priority of her tenure as USTR. However, she warned that current rules are putting countries with higher environmental standards at a disadvantage.

"For too long, we believed that trade liberalization would lead to a gradual improvement in environmental protection as countries grew wealthier from increased trade flows," she stated. 

However, what has happened in reality is that countries have failed to increase their standards - or in some cases actually lowered them - in order to attract investment from foreign companies that are prioritizing low costs.

"Many companies make sourcing decisions based on these artificially low costs, creating pressure on competing countries to ask if they, too, should suppress environmental protection to attract investment," she continued

Therefore, Ms Tai said new global trade rules must be implemented to avoid this "race to the bottom". 

She highlighted issues such as illegal logging and overfishing as two areas that stronger trade rules can help address by discouraging the use of products obtained through these activities. 

Meanwhile, streamlining international supply chains will also be essential in supporting technologies such as clean energy and low-emission vehicles.

For example, Ms Tai highlighted her work mediating a trade dispute between SK Innovation and LG Energy Solutions - two South Korean companies that make electric batteries in the United States. She said a "strong, diversified, and resilient supply chain of electric vehicle batteries" is vital in helping boost global demand and expanding manufacturing of clean energy vehicles.

She also warned that domestic-level policies will not be sufficient to tackle these issues, as "we will only truly address the global scale of this problem through global rules".