Wednesday, May 24, 2017

Speech at SIDA - Stockholm on trade, climate and development

Trade, climate and development 
Speech at the Swedish International Development Agency (SIDA)
Stockholm, Sweden
May 23, 2017

A Swiss investment bank has an interesting slogan: “A long view improves our view of the short term.” This is a very special month to me. Earlier in May my grandmother turned 102 and she keeps lucid and in good health. Also, any day now –hopefully not today- my wife will give birth to our second child. If this child enjoys the life expectancy of my grandmother, he or she will be alive in the year 2119. So when we speak about end-of-the-century scenarios I take it personal even though I will not be here.

I wish to mention briefly six issues that relate to our topic of today. First of all, the multilateral trading system is showing serious dysfunctions between what it should be doing and what it is doing. It should be doing all it can, as fast as possible, to implement all trade policy mechanisms that will allow us to reach the Agenda 2030 Sustainable Development Goals ideally way ahead of their deadlines. Instead, what we are doing is better illustrated by a Spanish fable of a group of rabbits that were hanging out in the forest when suddenly one yelled “dogs are coming!” One rabbit went to have a look and determined it was a pack of retrievers. “They are retrievers”, he announced. Another rabbit went to verify and corrected, “no, they are hounds”. And so the discussion began: Retrievers! Hounds! Retrievers! Hounds! In the end, the dogs arrived and ate all the rabbits. The WTO is still uncertain whether it wants to retain the Doha Round architecture or move into something else. The WTO is still unsure what it wants to talk about, like new issues that were not included in the Doha Round, or even old issues such as e-commerce, in which a moratorium has existed and has been renewed every two years since 1998 on the issue of electronic transactions.

Second, the private sector is highly engaged in the green growth agenda. A group of more than 280 global investors worth some US$17 trillion, has requested the G7 targeted climate and energy plans for 2050, a phasing out of fossil fuel subsidies and carbon pricing, and adoption of policies for low carbon investment. This remarkable leadership should be backed with the corresponding public policymaking required to implement such an agenda.

Third, the SDG agenda that the WTO should be addressing and discussing with all its resources and human capital should contain concrete results on: a) fisheries subsidies; b) fossil fuel subsidies; c) clean energy and environmental goods; d) e-commerce (trade policy for the digital economy); e) sustainable agriculture and food stockpiles (and not the agriculture from the 1970s); and f) responsible production and consumption (trade policy for the circular economy), among others.

Fourth, the issue of sea level rise should be top of mind of all policymakers worldwide, not least at the WTO. The Arctic is very close to my heart as I lived in the Norwegian Arctic for two years and the estimates of sea level rise for 2100 factor in possible melting scenarios of the Arctic including Greenland, which are vast amounts of frozen fresh water. But that figure is dwarfed by the amount of water that is frozen in Antarctica and that scientists are starting to scratch the surface to determine not whether it is melting, but how fast and how much water would it release into the world’s oceans. In other words, catastrophic sea level rise, the one that will displace hundreds of millions of peoples that live within a kilometer of the coast will likely come from the south pole which we barely know anything about.

Fifth, regarding fossil fuels, Costa Rica has been taxing them heavily instead of subsidizing its consumption. Unlike many other countries that use fossil taxes to finance government spending, Costa Rica created, since 1988, the first known mechanism of payment for environmental services (PES) through which reforestation has been incentivized. After nearly 30 years of this policy, forest coverage has more than doubled, influx of tourists seeking ecological tourism has grown ten fold, and the economy has grown seven times. This proven story of success is adaptable to all tropical developing countries that possess half of the fertile land and water of the planet and that hold such abundance of natural capital and renewable resources.

Finally, many of you watched in excitement the amazing close-up pictures of Jupiter taken by Juno, a remarkable piece of technology that brought the giant planet closest to human civilization than ever before. This was in part due to the amazing coverage that NASA does on social media of space exploration. They figured out how to make space exploration cool so the younger generations are learning and excited and engaged about it. Is there any better way of promoting the study of science in this day and age? So we must keep this in mind and figure out a way to make trade and climate action cool, most particularly from a development angle, which is what millennials care about: will I have a job and will it matter to solve the problems that my generation did not create but needs to address to live in peace and prosperity.

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