Following the impacts of COVID-19, many developing countries are attempting to rebuild their economies and alleviate the financial hardships of the people facing these impacts. Prior to the pandemic, the International Energy Agency predicted that renewable energy would expand by 50% between 2019 and 2024. As of 2022, it seems many nations are more focused on economic advancement rather than avoiding environmentally dangerous actions. Many world organizations are advocating for “greening trade” as a new growth strategy that could protect the environment and benefit nations with high poverty levels as a consequence of the onset of COVID-19. Green trade has the potential to transform developing countries.
What Does Greening Trade Mean?
According to the United Nations Environment Programme (UNEP), greening trade involves promoting sustainable measures to engage in trade that do not pollute land or water. The process focuses mainly on engaging in trade with renewable energy and energy efficiency markets. Greening trade helps the environment while maintaining trade relations for economic prosperity.
Evidence of Success in Greening Trade
In 2019, Palgrave Communications reported that the green trading industry generated $1.3 trillion in the United States economy alone. The industry has created 9.5 million full-time jobs in the U.S. In China, the International Monetary Fund (IMF) reported that a mix of carbon taxes and green investment could have the potential to increase China’s GDP by 0.7% and create more than 12 million jobs by 2027. It is clear that green trade has created success in major economies globally.
How Can Greening Trade Reduce Poverty?
The World Trade Organization (WTO) released a study in January 2022 suggesting that more trade in green technologies could help developing nations transition to a low carbon economy. This is an advantage for nations with impoverished populations because new guidelines by WTO may require green practices in the future. In consideration, implementing green policies could prepare developing countries for future trading markets while preventing the countries from lagging behind.
Greening Trade Begins in Developing Countries
In September 2021, the Brookings Africa Growth Initiative hosted an event to explore opportunities for green trade with Europe’s new Green Deal. The event occurred in hopes of encouraging the African Continental Free Trade Area (AfCFTA) to do the same. The AfCFTA is projected to bring 30 million Africans out of poverty simply by means of trade and would benefit from engaging in green trade to maintain trade relations with the United Nations. The recent African Green Recovery Action Plan states that “for the COVID-19 recovery to be sustainable, it must link a green recovery with an inclusive recovery.” The plan insinuates that marginalized groups and those in poverty can benefit from green plans.
The World Bank states that Vietnam should use its resources to promote green trade to maintain a competitive edge in international markets and generate new, innovative jobs for the unemployed to combat pandemic-induced poverty levels. Green recovery is crucial in the post-COVID-19 era to improve the conditions of those in poverty, specifically in developing countries that have the opportunity to rebuild.
Ways to Green Trade
UNEP suggests four ways that governments can actively engage in greening trade:
- Enforce strong environmental laws and regulations both at a national and international level.
- Have governments create trade rules and agreements that promote environmental awareness.
- Promote intergovernmental cooperation on green trade through improved monitoring, green trade finance and sustainability impact assessments.
- Identify stakeholder initiatives to green trade and supply chains to craft policy that complements such efforts.
Green trading is a relatively new industry and its full economic potential has not yet come to fruition. If developing countries take advantage of engaging in green trade now, these nations could be setting themselves up for the future of trade in general while benefiting their economies.
– Rachel Reardon