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Economic and Social Policies, International Relations, PUBLICATIONS

Trade policy for the Biodiversity Strategy 2030

Written by Jana Titievskaia.

© Mar / Adobe Stock
© Mar / Adobe Stock

International trade influences biodiversity through scale, composition and technique effects. Land and sea use change alter natural habitats, while emissions from production and transportation contribute to climate change. Among exports, animal-based agri-food products are particularly land-intensive. Trade policy can play a role in tackling these problems through stronger enforcement of biodiversity-related provisions in trade agreements. The EU Biodiversity Strategy 2030 commits to better assessing trade agreements’ potential impact on biodiversity and to better enforce biodiversity-related provisions. The Trade Committee of the European Parliament has adopted an opinion on the trade aspects of the new strategy.

Impacts of trade on biodiversity

Human economic activity has surpassed for years the rate of biosphere regeneration and total biodiversity stock of the planet. A 2012 study by Lenzen et al. linking species threat records with 15 000 commodities and 5 billion supply chains found that 30 % of threats to species were due to international trade, excluding invasive species. Moreover, the existence of tipping points in planetary boundaries means that gradual degradation in one region can lead to unintended destabilisation at the global level e.g. of water cycles. The option value of nature reflects the additional worth of conservation over use for e.g. business purposes. Different species may be instrumental for wellbeing, while extinction is irreversible. Therefore, protection of ecosystems and biodiversity can be viewed as an investment that will yield future returns.

A 2020 study on trade and biodiversity, commissioned by the European Parliament’s Committee on International Trade (INTA), distinguishes between direct and indirect impacts of trade on biodiversity. Direct impacts stem from transportation (e.g. air cargo, road transport and shipping), arrival of alien pests or wildlife trafficking. Indirect impacts can be divided into scale, composition and technique effects. Trade expansion can deplete natural capital as human demands on the biosphere increase (scale effect). Extractive or pollution-intensive activity can concentrate regionally, reflecting comparative advantages (composition effect). Trade liberalisation can contribute to the adoption of environmental technologies and goods, patents or production methods (technique effects).

In practice, land use change is a considerable driver of terrestrial species loss. Between 1986 and 2009, the majority of new cropland was used for exports. The agri-food industry is the world’s largest land user. Animal-based exports (e.g. lamb, beef, and cheese) are more land-intensive per kilogram of food produced than plant-based goods (e.g. rice, bananas and citrus fruit). Trade in raw materials (e.g. mining, quarrying) also influences the levels of biodiversity through emissions and pollution in air, land and waterways. However, the environmental impacts are highly variable and skewed across and within regions, suggesting that environmental mitigation measures and institution-building can considerably reduce adverse impacts.   

European Commission proposal

In 2011, the Commission adopted the EU biodiversity strategy to 2020, which sought to enhance the contribution of trade policy to conserving biodiversity and addressing potential negative impacts of trade. The Commission committed to analyse the impacts on biodiversity in trade sustainability impact assessments and ex-post evaluations, and include biodiversity goals in the trade and sustainable development (TSD) provisions of agreements with partners. In 2020, the Commission adopted a communication on ‘EU Biodiversity Strategy for 2030: Bringing nature back into our lives‘, which calls for at least 30 % of land and 30 % of sea protection in the EU (up by 4 % and 19 %, respectively compared to today) building on the EU Green Deal. On trade, the strategy focuses on implementation and enforcement of these provisions, including through the EU Chief Trade Enforcement Officer. The strategy also commits to an assessment of trade agreements’ impacts on biodiversity (see box). The Commission seeks to further address illegal wildlife trade (following the EU Action Plan addressing wildlife trafficking which will be reviewed in 2021) and to ban EU trade in ivory. The possible revision of the Environmental Crime Directive could broaden its scope and include provisions for types and levels of criminal sanctions. In 2021, the Commission plans to adopt a legislative proposal seeking to avoid or limit EU market entry for imports that contribute to deforestation. Biodiversity has been included among the headline actions in the 2021 trade policy review (new EU trade strategy).

European Parliament position

In April 2021, the INTA committee adopted an opinion on the trade aspects of the EU Biodiversity Strategy for 2030 (rapporteur Saskia Bricmont, Greens/EFA, Belgium). The opinion recommends to the Commission to focus on a ‘process and production method’ (PPM) approach when drawing up measures to fight biodiversity loss, rather than focusing on the product itself, in line with rules of the World Trade Organization. The opinion takes a stand on phasing out fossil fuels subsidies urgently. It also calls on the EU to explore a white list of endangered species to combat illegal trade. The INTA opinion provided concrete suggestions to the Committee on Environment, Public Health and Food Safety (ENVI) report on the biodiversity strategy (rapporteur César Luena, S&D, Spain), which is due to be voted in plenary in June 2021. The Parliament also adopted, in October 2020, a resolution to halt and reverse EU-driven deforestation advocating for mandatory due diligence requirements for products entailing forest and ecosystem risks.

Views

While EU trade agreements foster international trade through tariff liberalisation and abolition of non-tariff barriers, import-based consumption increases ecological footprints. The footprint data foundation displays the ecological footprints of different countries (in productivity weighted biologically productive hectares). Most of the developed world, including EU countries, the United States and China, is in ecological overshoot, while most of South America and important parts of Sub-Saharan Africa have positive biocapacity reserves per capita. The EU tries to limit these adverse effects by including TSD provisions in trade agreements and making developing countries’ access to tariff preferences conditional on the ratification and implementation of multilateral environmental agreements. However, these provisions are not enforceable in the same way as, for example, trade in goods commitments, which has led researchers to criticise their effectiveness. TSD provisions fall under a separate dispute settlement process, with consultations, panel deliberation and issuance of recommendations, but not economic countermeasures. A notable exception is the EU-UK Trade and Cooperation Agreement (TCA), which includes rebalancing measures (e.g. tariffs) in case of ‘significant divergences’ between parties.

While sustainable development is a key objective in the preamble to the WTO Agreement, biodiversity-focused measures may prove difficult to justify under the general exceptions of Article XX of the General Agreement on Tariffs and Trade (GATT) where causation between the measure and the objective must be demonstrated. For example, the revised EU Renewable Energy Directive (RED II) limits the inclusion of crop-based biofuels with significant indirect land-use change (ILUC) risk in the calculation of Member States’ required minimum share of renewable energy. However, Indonesia and Malaysia have challenged this as discriminatory against palm oil used in biofuel production, notably citing the Technical Barriers to Trade (TBT) Agreement and the Subsidies and Countervailing Measures (SCM) Agreement, in addition to the national treatment principle under the GATT. Researchers have posited that the EU may invoke the GATT general exceptions defence during the dispute, for instance arguing that the objective of RED II is protecting animal / plant life or health (XX b), or conservation of exhaustible natural resources (XX g).

On 19 May 2021, the Commission published a methodology for assessing the impacts of trade agreements on biodiversity and ecosystems, developed by the Institute for European Environmental Policy (IEEP) and partners. The methodology outlines a staged process for impact assessment, recommending a comprehensive approach, using data, research, existing case studies, expert knowledge and stakeholder interviews. For the most significant biodiversity impacts, it recommends quantified analysis whenever possible. The methodology starts with identifying the trade-related driver(s) for change, i.e. sector(s) where an FTA leads to an increase in economic activity. It then ‘translates’ this change into possible pressure on biodiversity – through land or resource use – and assesses the resulting impact on ecosystems and/or species. The methodology also identifies safeguard measures that can be drawn up to mitigate negative impacts. The methodology has already been used in practice in the context of ex-post assessments for the EU–Andean and EU–Central America trade agreements.

Read this ‘at a glance’ on ‘Trade policy for the Biodiversity Strategy 2030‘ in the Think Tank pages of the European Parliament.

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