Submission to the House of Commons International Trade Committee, Trade and Environment Inquiry

Abstract

This submission addresses questions (1), (3), (5) and (7) posed in the inquiry’s terms of reference:

• How well are the Government’s free trade agenda and its environmental policies aligned? And is the Government ambitious enough in its approach?

• What might be the impacts of measures introduced by the UK’s trading partners designed to reduce reliance on carbon-intensive fossil fuels – for example carbon border adjustment mechanisms – on UK trade? And what could a UK carbon border adjustment mechanism mean for its imports and exports?

• By what measures should the environmental impacts of new free trade agreements be assessed?

• What can the UK learn from other countries’ experiences of aligning trade and environmental policies? How have other countries innovated in this area?

The first section focuses on question (3) on carbon border measures, evaluating the strengths and weaknesses of the EU proposal for a carbon border adjustment mechanism (‘CBAM’) and assessing the potential implications for the UK. It also takes into consideration the effects of the potential adoption by the UK of CBAM-like carbon border measures.

The second section addresses questions (1), (5) and (7), focusing on the pursuit of environmental and climate change mitigation goals in the context of UK free trade agreements (‘FTAs’). It encompasses an analysis of Trade and Sustainable Development (‘TSD’) or Environmental Chapters in EU and US FTAs, highlighting the advantages and disadvantages associated with the EU and the US approaches. The UK can learn from these countries’ experiences while remedying the weaknesses which are typical of their approach to FTAs. Further, it analyses the extent to which the UK may have recourse to environmental conditionality, with a view to promoting environmental values in different jurisdictions and safeguarding its internal agenda for environmental protection and climate change mitigation.