Trade, Environment and Climate Change

The deepening dynamics of globalization and the evolving trade-investment patterns might affect the environmental scenario or climate change pattern in a country in a number of ways, which may not be linear in nature. A country may suffer from export myopia in the short run, embracing liberalization of the inward investment and production policies without adequate filtering mechanism, or adopting relatively less stringent environmental policies, leading to overexploitation of resources. While prevalence of trade-led environmental degradation in the initial phase of development has been noted, once the export volume increases, with a consequent rise in the income level, the population in a country may develop an affinity for a better environment. The UN SDGs require all the countries in the world to ensure responsible production and supply chain within their territories, fulfilling a series of commitments by 2030. During the Paris Climate Deal discussion, the participating countries have decided to undertake several reforms on this front, including the urgency of containing the rise in global temperature for mitigating the climate change related challenges. It is however anticipated that all the countries, particularly the low-income ones, may not be able to fulfill all their commitments by the stipulated deadline, which, in itself, may create significant cross-border trade, investment and cooperation opportunities.