Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) \\\\\\\\\\\\\\\\\\ Sustainable Development, Green Economy, International Trade and Global Value Chains: The Linkage Presenter: Rita Lindayati, Senior Environment Specialist, TPSA Project Conference Board of Canada lindayati@conferenceboard.ca Tuesday, February 20 th , 2018
Overview Setting the Context: • Sustainable Development: Balancing Environmental, Social and Economic Goals • Towards Green Economy • International Trade, Global Value Chains, (GVCs) and Environment: the Linkages • Understanding the Globalization of Environmental Impacts through Lifecycle Assessments • Is International Trade Good or Bad for the Environment ? • Environmental Protection and International Trade: A Regulatory Interface
Sustainable Development Development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED, 1987).
Environmental Pressures: Global Context • In the last 50 years, humans had altered the world’s ecosystems more fundamentally than at any period in human history • Some 60% of the world’s ecosystem services are being degraded/used unsustainably • The current rate of species extinction is 1000 times greater than typical historical rate • Global CO2 emissions have quadrupled with increasing evidence that we are approaching tipping points of catastrophic climate change • Half of the world’s fish stocks are being fished at their biological limits, and another quarter have been depleted • If current trends continue, in 20 years three billion of people will be expected to live in countries facing “water stress” ( Millenium Ecosystem Assessment, 2005 )
Social and Economic Costs of Environmental Problems: Indonesia Context 08) Environmental Economic cost Social cost problems Water pollution & $7.6 billion Sanitation-related inadequate water or diseases (e.g., diarrhea), skin disease supply 2% of GDP due to the use of polluted water, fish (mostly from production, costs of flooding due to poor household & drainage, lost of tourism opportunity, industry) etc.. Indoor & outdoor $5.5 billion Mortality & morbidity from cardio- pollution or pulmonary disease in adults, lung (mostly industry 1.3% GDP cancer, acute respiratory infections in & transport) children. Estimated to cost 2.5 – Climate change More rainfall, flooding, reduced soil 7% of GDP by 2100 fertility, declining rice yields, damage to (Source: ADB, 2009) coastal areas (rising sea level, land subsidence, more frequent storms) Deforestation Estimated to have lost Loss of livelihoods, way of life around $150 billion worth of forest between 1990 and 2007 (or nearly 5% GDP each year)
What is environmental sustainability? Environmental sustainability: the ability of plants, animals, micro- organisms, and their non-living surroundings (land, air, water) to sustain themselves, and people, now and in the future (adapted from http://www.international.gc.ca/)
Towards Green Economy Green Economy : a system of economic activities related to the production, distribution and consumption of goods and services that result in improved human wellbeing over the long term, while not exposing future generations to significant environmental risks and ecological scarcities (UNEP, 2011). Example: • Increase in green investment • Increase in jobs in green sectors • Decrease in energy and resource use per unit of production • Decrease in waste and pollution • Decrease in unsustainable consumption 8
9 The Relationship between International Trade, Global Value Chains and Environment • At a fundamental level, the production and exchange of goods and services which underlies the international trade relies on the environment in the form of natural resources • Global Value Chains (GVCs) refer to the phenomena where the different stages of the production process are located across different countries. The past decades have witnessed increasingly fragmented and internationally dispersed value chain activities (e.g., design, production, marketing, distribution, etc..) • Greening GVC aims to minimize or eliminate adverse environmental impacts along supply chain, from product design, material resourcing and selection, manufacturing process, delivery of final product and end-of-life management of the product (Thoo Ai Chin et al., 2015) • A product lifecycle assessment provides a method to understanding the environmental impacts of its global value chains 9
Environmental Aspects in A Product Life-cycle Inputs Life-cycle stages Outputs Atmospheric emission Raw material acquisition Raw Materials Waterborne waste Manufacturing Solid waste Energy Use/maintenance By-products Other releases End of life/recycle/waste Source: US-EPA 10
Understanding A Product’s Environmental Impacts through Lifecycle Analysis • Life Cycle Assessment method provides a tool to assess environmental impacts (i.e., resource consumption and emissions) across the full life cycle of a product, from material acquisition to manufacturing, use, and final disposal. • Environmental “hotspots” refer to the activities that cause the highest environmental impacts in a product’s lifecycle (e.g. dyeing process in textile manufacturing). • If environmental hotspots are known, efforts to reduced environmental impacts can be focused. • The environmental impacts of globally traded commodities are spread between exporting and importing countries 11
Example 1: coffee lifecycle CO2e emissions of 1 kg coffee green bean produced in Costa Rica, consumed in Europe (http://www.balas.org/BALAS_2013_proceedings_data/data/documents/p639212.pdf) 12
Environmental Hotspots for CO2 emissions (http://www.balas.org/BALAS_2013_proceedings_data/data/documents/p639212.pdf) ((( (http://www.balas.org/BALAS_2013_proce edings_data/data/documents/p639212.pdf) \ 13
Example 2: 14
Example 3: A typical pair of running shoes generates 30 pounds of carbon dioxide emissions, equivalent to keeping a 100-watt light bulb on for one week (MIT, 2013) 15
Various business initiatives to make greener value chains 16
Green measures in Nestle product lifecycle 17
Cons Pros Increased trade increased economic activities could deplete Increased trade economic natural resources and worsen growth higher income pollution more resources for environmental protection Weak environmental standards and law enforcement in many developing Better access to cleaner countries would attract polluting technology and environmental industries goods and services Encourage technical innovation May undermine national governments’ and more efficient allocation of policy space to environmental resources management (e.g., restrict certain types of regulations, deregulation imposed by trading partners, pressures by industries Improved environmental standards to improve their international (especially to meet the requirements competitiveness) from the developed markets) 18
19 Environmental Impacts of Trade Scale Environmental impacts: Product • Land • Water • Air • Flora & fauna Structure • Human health • Etc. Technology Environmental Policies/ Regulations 19
FTA Environmental Provisions: Historical Trends • GATT General Exceptions Articles XX (b) and (g) • Groups on Environmental Measures and International Trade/ EMIT (dormant) • Sanitary and Phytosanitary (SPS) Measures GATT Global Environmental Events • Technical Barriers on Trade (TBT) (1947) • Subsidies and Countervailing Measures (SCM) - 1972 UN Conference on the • Trade-Related Aspects of Intellectual Property Rights (TRIPS) Human Environment • General Agreement on Trade in Services (GATS) (Stockholm Conference) • Agreement on Agriculture (AoA) - 1987 Brundtland Report - 1992 Rio Earth Summit (Agenda 21) - 2002 World Summit On Sustainable Development • Preamble of Marrakesh Agreement: Sustainable Development Objective • GATT General Exceptions Articles XX (b) and (g) WTO • SPS, TBT, SCM, TRIPS, GATS, AoA (1995) • Established the Committee on Trade and Environment (CTE) to advice General Council on Trade-Environment linkage • Established Committee on Trade and Environment Special Sessions (CTESS) focusing on trade-environment negotiations: e.g., link between WTO & Multilateral Environmental Agreements (MEAs), fisheries subsidies, removing trade barriers on environmental goods and services 20
GATT Article XX: General Exceptions • Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: (b) necessary to protect human, animal or plant life or health; (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; 21
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