Introduction

Climate and trade have had a long-contested relationship as both directly impact the other. Negative externalities from trade and industry which have immediate effects on climate are part of basic economic theory. This complicates the conversation involving the two, as they are very closely connected to the quality of life and livelihood of citizens. As one of the most populous countries in the world, India needs to respond to the climate-trade question in a more proactive manner than is the case in current public policy. The question continues to gain more prominence across both multilateral and bilateral discussions, the Conference of the Parties (COP) process being the most prominent of them. For instance, the negotiations as part of the India-EU Free Trade Agreement (FTA) saw the European Union (EU) calling for a mandatory Trade and Sustainable Development Chapter.

According to the World Trade Organization (WTO), there are up to 250 multilateral agreements governing countries’ relationships with the environment.^[1] They highlight critical issues like the fragmentation of environmental rules and responsibilities, which hinder coordinated efforts on climate change issues and new discussions at the WTO on Trade and Environment. The latter conversation has been deeply divisive, with countries like India resisting the addition of new, non-Doha Round issues at the WTO, like gender, plastic pollution, and other Joint Statement Initiatives. Putting trade and environment in the same sentence is anathema to some policymakers. On the other hand, trade as the spine of economic activity is perhaps the most prolific contributor to climate reversals.

The question of making manufacturing more climate-conscious features in much of trade policy debates. Newly industrialising countries constantly face the dilemma of attempting to attain economic security without the moral blind eye that the Global North enjoyed in its industrial age. Environmental standards as non-tariff barriers are a subset of the larger trade and environment discussion but have slowly become pervasive and transformed into another ‘developed versus developing country’ issue. In a 2023 report, the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)^[2] emphasised an argument earlier made by Knebel and Peters^[3]—that technical measures can drive up the cost of manufacturing by 3.4 percent.

‘Green Standards’, Defined

Green standards or environmental standards are a specific type of quality standard established by governments or the private sector to reduce the human or industrial impact on the environment. The OECD (Organisation for Economic Co-operation and Development) defines ‘green standards’ as limits that determine the maximum allowable degradation of the environment.^[4] Standards are used throughout the lifecycle of value creation across goods and services. They are used when “making a product, managing a process, delivering a service, or supplying materials.”^[5]

Two main agreements at the WTO govern standardisation rules: the Sanitary and Phytosanitary (SPS) measures, and Technical Barriers to Trade (TBT) Agreements. They are the bedrock of standard-setting activities and determine the notification and transparency rules at the WTO. The UNCTAD study referenced earlier found that climate change-related Non-Tariff Measures (NTMs) account for 26.4 percent of world trade—about US$6.5 trillion.^[6] The same study notes that TBTs account for 61 percent of all identified NTMs linked to climate change.

Green standards, like others, are governed by the WTO SPS and TBT Agreements. According to the ePing platform run jointly by the International Trade Centre, the WTO, and the United Nations, WTO members had notified 2,175 SPS and 3,897 TBT measures in 2022.^[7] Of the total 6,072 notifications, 611 notifications were environment-related.^[8]

Figure 1: SPS and TBT Notifications at the WTO (1995-2024)

Source: WTO; “Notifications - ePing SPS&TBT Platform,” https://www.epingalert.org/en/FactsAndFigures/Notifications.^[9]

Figure 2: Environment-Related Notifications at the WTO (1997-2022)

Source: WTO Environmental Database^[10]

As is evident in Figure 2, the number of environment-related measures and notifications by WTO members has grown steadily between 1997 and 2022. There is a visible spike in 2021 with 931 notifications, some prompted by the COVID-19 pandemic. Between 2009 and 2022, out of a total 26,858 environmental measures and notifications across all WTO agreements, 5,343 were TBT and 1,187 were SPS notifications. The Agreement on Subsidies and Countervailing Measures was the second most utilised agreement for environmental purposes, with 4,661 measures adopted (see Figure 3).^[11] Further, and perhaps not surprisingly, the European Union (EU), the United States (US), Brazil, and China are top notifiers on green standards (see Figure 4). This is not necessarily an indication of good or bad policy-making, but the general trajectory of the development of standards in countries that are pivotal to global growth. It also reveals where the rule-making is taking place, with the rest of the world becoming rule-takers by default. This means that a company in Europe may introduce a private standard or quality requirement, which will eventually become the norm.

Figure 3: Environment-Related Notifications and Measures by Agreement (2009-2022)

Source: Author’s own, based on the WTO Environmental Database^[12]

Figure 4: Top 30 WTO Members by Environment-Related Notifications and Measures (2009-2022)

Source: Author’s own, based on the WTO Environmental Database^[13]

According to the International Organisation for Standardisation (ISO), its ISO 14000 family of environmental management standards is one of the most used. It reveals a consciousness within industry to be fast movers who voluntarily adopt such standards, which may increase efficiency and also future-proof them against upcoming environmental legislation. However, no real change, arrest, or reversal of environmental damage will be possible without the manufacturing sector’s (both public and private) active participation in the process. Production and distribution processes will have to make substantial improvements along the lines of better tracing of product sources, encouraging sustainable production and manufacturing practices for positive change to occur. However, hurdles to sustainable or green manufacturing persist due to cost and technology challenges, especially those related to manufacturing standards.

A White Paper published by the OECD and the World Economic Forum (WEF) in November 2023 found that while Transport Services, Steel, and Cement are the largest contributors to Scope 1 (direct) emissions, the Agriculture and Capital Goods sectors are the largest contributors to Scope 3 (indirect emissions), followed by the Oil and Gas sector.^[14] These sectors are infamous for complex sourcing standards and value chains. The report also found that one-third of human emissions come from the Food and Agriculture sector. Besides being one of the most regulated by SPS measures, it also has stricter standards for emissions reporting. Meanwhile, the WTO ePing database notes that domestic and commercial equipment production and chemical technology lead the charge on TBT standards in India.^[15]

Box 1: The Mobius Loop: Popular or Infamous? |ISO 14021:2016[16]  The ISO Standard 14021:2016 is the norm for environmental labels and declarations for self-declared environmental claims. One of its most interesting codifications was the ‘Mobius Loop’ or the symbol for recycling. The graphical symbol of three arrows following each other in the form of a triangle has become ubiquitous to daily life. The ISO 14021 defines everything from what constitutes compostable, degradable, recyclable, and even renewable materials. It sets the feasible percentages, which then qualify a product to use the corresponding label once it has been accredited as standard compliant. Source: Compliance Gate[17]

This example provides an insight into the many steps involved before a manufacturer can claim to meet specific quality standards. Going through the stages of production, compliance checks at accredited labs, review by an accreditation body, and finally, the following certification—which needs to be renewed after a stipulated period—all contribute to production costs. Thus, standard formulation, compliance, and accreditation are by no means an inexpensive task.

The Cost of Compliance

Making industry accountable is a key part of any sound climate policy. This needs to be done in tandem with other changes in patterns of consumption and individual lifestyles. The steady increase in the number of environmental standards and measures over time is an indication of this consciousness that has permeated both policymakers and private entities. In addition to slowly becoming the industry norm, environmentally conscious value chains and manufacturing processes have become a consumer demand. The demand for cleanly sourced products has also increased over time. A Deloitte study from 2025 suggests that the Gen Z and Millennial generations are 27 percent more likely to buy from a company that has a reputation for clean sourcing and sustainable practices.^[18] The most definitive way for a company to prove that it follows sustainable practices is by demonstrating compliance with international or sectoral best practice standards.

However, German economist Hans Wiesmeth, in his 2021 book, argues that one of the primary concerns when it comes to environmental standards is the potential for a “race to the bottom”—referring to the conflict that arises between international trade rules and the imperative for environmental protection.^[19] The catch being that protectionist trade rules, even for noble causes, do not sit well with laissez-faire economics. He feared that trade policies encouraging corporate competitiveness in terms of environmental standards would see a reversal in actual action due to the impact that these standards have on the international competitiveness levels of the domestic industry. In addition, Wiesmeth recognises that these standards can become entry barriers for SMEs (Small and Medium Enterprises). International trade can be seen as a roadblock to the achievement of environmental goals due to the manufactured competition for market space.

There is also an important concern that most environmental standards are formulated by the West and are linked to climates and scenarios not representative of the tropical belt and other geographies. Speaking in the context of Brazil, Daniel Vargas and others have argued that international measures need to be “tropicalised” so that countries can have their own definitions of what constitutes ‘green’ in terms of measurement parameters.^[20] This is one of the many dilemmas that standard creation and compliance serve up for policymakers. A World Bank study found that standard compliance can cost firms up to US$425,000 based on their econometric modelling.^[21] These expenses are not fixed costs as compliance needs to be upgraded and proved periodically. An assessment published by the WEF finds that access to finance is a hurdle for SMEs when upgrading themselves to be compliant with environmental standards.^[22]

This lack of financing also showcases other areas where SMEs might need support. Limited access to technology and awareness of new developments in these standards are other hurdles they may face. Leading firms in global value chains (GVCs) prefer partners that are compliant with specific standards, adding another layer for SMEs to consider when trying to plug into GVCs. It encourages the transfer of green technologies along the value chain. Standard compliance also has larger implications for investment in a country. Companies are more likely to invest in countries where they find higher-quality compliance, in addition to other considerations of the costs of labour and infrastructure.

Understanding International Developments

Climate policies in the Global North tend to leave a bad taste with countries in the Global South. The argument is that the countries of the Global North have never had to pay for historical environmental damage caused by their own industrialisation process, even as they penalise the latter for environmental damage.

Three policies explicate this:

1. Carbon Border Adjustment Mechanism (CBAM): The CBAM, as a non-tariff barrier to trade, has been a disruptor in trade negotiations and relations with the EU. While the EU’s argument that it is meant to prevent carbon leakage is plausible, it is a levy that will increase compliance costs and therefore impact trade costs. In addition to the compliance burden, the complexity of calculating the emissions costs is multiplied by the price of the certificate. Overall, the measure is unlikely to create a positive change. Often, the demand for products from high-carbon-emitting sectors like Critical Minerals and Steel is inelastic in the short term. The rate of R&D for substitutes is also long, making CBAM little more than a barrier to trade.
2. Inflation Reduction Act (IRA): Implemented by the Biden Administration in 2022, the IRA would have been a big step forward for the US in terms of investment in clean energy technologies and infrastructure. While the domestic content requirements to qualify companies for tax credits would have been a barrier, it would have encouraged industries to plug into these clean energy value chains and helped move the needle on green production practices. The Trump Administration, in its second term, has dismantled some such sections of the IRA that concern benefits accruing from green industrial practices, making it much less attractive to participate in industries that receive the remaining IRA benefits.
3. The EU’s Green Deal Industrial Plan: An elaborate industrial plan with several pillars, the plan lays out a comprehensive vision for the future of manufacturing in the EU. From Net-Zero industries, the Critical Raw Materials Act, to the Strategic Technologies for Europe Platform (STEP)—in addition to clear processes to mobilise investment and funding—the plan is exemplary in its direction and focus. While specific export controls within pillars of the policy may present trade challenges, agile private sector players will be able to better plug themselves into the EU market. As with any comprehensive plan, the complexity of the policy is a challenge. Opaqueness in procurement procedures and funding applications will have to be accounted for and mitigated.

‘Fictional Futures’: The WEF Scenarios and Policy Interplay

To understand the impetus behind these policies, it is important to investigate the policy scenarios at play when discussing trade and environment policies. A June 2023 report by the World Economic Forum (WEF) posits four scenarios based on the variables of trade cooperation and climate efforts to strategies for carbon competitiveness.^[a],[24]  They are summarised in the following paragraphs:

1. Climate on Track: This scenario assumes that international rules are in place and are being honoured by all signatories. First, it emphasises a close working relationship between the WTO and the UNFCCC working party. Second, it assumes that this working party creates methodologies for emissions measurement that represses discriminatory trade barriers while also allowing for effective trade subsidies. The third assumption has two important elements: (i) the mobilisation of green finance for developing economies and Least Developed Countries (LDCs); and (ii) partnerships between corporates and development banks to mobilise green investment to decarbonise supply chains.

Challenges:

This scenario has three main drawbacks:

1. It assumes that cooperation between international organisations is the most efficient way to achieve carbon competitiveness.
2. The methodologies adopted are likely to be ‘one size fits all’, making them ineffective for a majority of partners. Especially, with rule-making in today’s context, where the Global North has a louder voice.

• It talks about reducing discriminatory barriers to trade on the one hand while having green subsidies. when in the traditional trade policy sense, subsidies to industries are seen as a barrier to competition.

2. Fractured Efforts: This scenario can be seen as closest to current reality. It pictures a future where emissions have been reduced through green measures. However, the consequences of this include more trade wars as countries formulate domestic policies to protect their firms from carbon leakage.^[b] Exclusive climate clubs are at the centre of this scenario, which widens the North-South gap and complicates the business environment and the spread of innovation. The market is distorted as more investments flow into countries with better green subsidies.

Challenges:

This scenario does not account for:

1. Rivalries between members of these exclusive clubs. India, for instance, may not want to be a member of a club in which China is participating.
2. While trade in green goods might increase, the technology and manufacturing capacity may get monopolised due to Local Content Requirements and production-based incentives, further fuelling trade wars.

3. Exponential Disasters: The key variables accounted for in this scenario are resource wars, economic slowdown, and increased protectionism. Food and fuel insecurity, which result in inflationary tendencies, will further exacerbate market volatility. Resource conflicts already occur intermittently but are manageable through existing systems of negotiation. If the fractured effort scenario fails to deliver—which it will, in the long run—it will quickly devolve into this third scenario. There are already signs of this with China curbing exports of critical minerals.

Challenges:

This scenario is the first to acknowledge security concerns as part of the trade discourse. However, to be robust, it is important to acknowledge that:

1. Protectionist measures adopted by countries are usually justified at the WTO on grounds of the ‘national security exception’.^[c] The adoption of these measures has been a running thread in the other two scenarios as well.
2. The challenge of resources being controlled by exclusive groups is also an everyday reality—whether it be the OPEC story, specific green technologies in the Global North, or critical materials in China.

This gap needs to be addressed in one of two ways—either the national security element in trade policy is acknowledged from the get-go, which will be a challenge to the limits placed on this exception by the WTO, or the climate conversation must not be merged with the resource trade conversation. Neither option is fully viable.

4. Collective Avoidance: This scenario presents a much watered-down climate ambition, marked by scepticism about climate action, limited attempts at global governance solutions, and rising inflation. It posits that by 2025, the G20 would promote efforts to manage supply chain risks prompted by the WTO. However, the slowdown in climate policy would likely take a toll on these international talks.

Challenges:

1. This scenario does not account for the fact that green industries already constitute a bulk of domestic economies and create new-age jobs even as automation replaces others.

Where Does India Stand?

A 2021 ORF paper noted that the estimated outlay required by the Indian government on green infrastructure alone is US$200 billion per year up to 2030.^[25] It makes key recommendations regarding both the establishment of new standards and the upgrading of existing norms to align with international standards. These are important and strategic recommendations that India must explore as it moves into the next phase of its development, with 2030 being only four years away. While logically, the goal post will shift again, the aims of the 2030 Agenda remain the guiding force for future-proof policymaking. Fragmented policymaking also creates uncertainty in the trade environment and drives up the costs of trade. India should lead in setting standards as it builds its manufacturing base. There is no need to reinvent the wheel. However, there is space to create innovative standards for the circular economy and green procurement in a way that adds value to the economy.

In 2018, India published its National Strategy for Standardisation (INSS).^[26] Goal 4 of the strategy under the Standards Development pillar highlights the harmonising of Indian standards with international standards. Goal 8 relates to Private Sustainability Standards or Voluntary Sustainability Standards (VSS). It identifies the challenge of these standards that develop outside the purview of the WTO and highlights the need for India to have its own ecosystem for compliance with them, even as efforts are made to ensure that it has a seat at the table as these standards are developed. Another key piece of the puzzle is how resource extraction will work in the future. That natural resources are limited is one of the first rules of economics. It is what prompted discussions around circular economies to mitigate supply risks. Future resource recovery and domestic self-sufficiency are contingent on access to new environmental technologies.

‘Aspirational Futures’: An India Strategy

There are several threads of conversation when it comes to ‘climate and trade’. There is a moralistic “do better by nature” narrative that finds little traction with the private sector. There is the sustainable production and consumption thread that has a more neutral base of takers both in the public and the private space. Finally, there is the purely economic narrative of the industries of the future, and therefore policies for the future of trade. There is profit to be found in climate-sensitive trade.

While it is not feasible to entirely ignore the climate question when it comes to trade policy, a more practical hypothesis is likely to gain traction among policymakers and industry. The approaches mentioned in the WEF scenarios discussed earlier have two common and connected weaknesses: they take a Global North lens to the problem and, by default, to the solutions. In these scenarios, countries of the Global North are making the rules and sensitising the Global South about them.

For India to have a stable climate and trade policy, it needs to ideate scenarios at the intersection of Scenarios 1 and 2 and ensure that it is a rule-maker at the table. This is imperative to ensure that history does not repeat itself when it comes to international agreements on the climate crisis. While Scenario 1 becomes an exercise in geopolitics and Scenario 2 may be driven by domestic policy developments, the role of the private sector is at the intersection of the two.

The two scenarios could be understood as follows:

1. Conscious Consensus: In this scenario, while the need for international cooperation would be acknowledged, there would be a conscious effort to ensure that Global South voices are present while creating international standards. Rule-making would happen based on their respective development position and financial needs. Take the example of the WTO Trade Policy Tools for Climate Action released in the lead-up to COP28,^[27] a classic example of a ‘one size fits all’ solution. While it advocates common standards, common pricing mechanisms and procurement policies, and food and agriculture policies, it over-emphasises the problem of fragmented policy, thereby missing the unique nature and impact of climate change in various geographies. It mentions climate finance for the dispersion of technologies, for instance, without once acknowledging the need for ‘loss and damage’ funds. The definition of consensus cannot be top-down but must be configured more in concentric The outermost circle is the largest possible negotiation body, the WTO, which is to verify the needs of the lowest common denominator. Gradually, smaller units like the G20 and other regional groupings, down to specific countries, can finally adapt these policies to their specific needs.

2. Jigsaw Diplomacy: Instead of attempting climate policies where exclusive clubs work in silos, an ecosystem approach is necessary, where climate-friendly policies in one region will have a virtuous impact in others. Approaches like the US’s Inflation Reduction Act, which incentivises local industry but may negatively impact investments, versus Europe’s Carbon Border Adjustment Mechanism, which is explicitly protectionist, require balancing with domestic policies in those countries most impacted. Green non-tariff barriers like the IRA and tariff barriers like the CBAM will eventually distort the market for green goods. A middle ground must be found, for two reasons:

1. The demand for products that are produced through high-carbon-emitting methods has not reduced in the Global North. There is no reason why the Global South should be penalised for fulfilling a market need.
2. This does not mean that efforts to incentivise green supply chains cannot continue. Preference for sustainable producers in procurement initiatives is a policy that can be encouraged.

Besides this, Scenarios 3 and 4—as described by WEF—are the more undesirable ones. However, they do identify what the “worst case” would look like. For India to prepare for these, it may be useful to approach it from a more optimistic lens.

3. Classic Comparative Advantage: In this iteration of resource diplomacy, it would be easier to look back at the barter system. Some of the resources essential to the green transition share the same features as fossil fuels – their demand is high, but their availability is limited by both geography and the technology required to access them. Resource-sharing systems must be negotiated to provide win-win scenarios for countries seeking these resources and those who have deposits of them. For instance, if the DR Congo has reserves of a critical mineral that India wants, it should negotiate trade deals such that there is some amount of technology transfer with a guarantee of steady access to that resource. This system would have the added advantage of diversifying and therefore strategically securing supply chains.

4. Status Quo: The imagined scenario of climate apathy is closer to what is happening with the real scale of the investments required to overhaul domestic production systems. The new policy position of being climate-forward loses its sheen as the costs of the transition are too high. It is important to ensure that there is no backsliding on current climate commitments. Recent reversals on climate policy at subsequent COP events and the drastic change in the US’s approach to trade and environment issues are concerning. Incentives must be created not just based on the long-term advantages of the crisis, but also on short-term profit.

Future-Proofing in the Indian Context

India has been questioning the conflation of trade and environment discussions at the WTO, given the plethora of other international agreements and fora where environmental issues are discussed. There is no principled aversion to clean supply chains, but an aversion to the weaponisation of green standards and their tendency to be used as barriers to discourage competition.  In this context, and with the growing discourse around climate impact in the Global North, specifically the impact of industrialisation on climate, India needs a clear climate-centred industrial policy. The policy needs to support its ambition to go up the value chain in terms of production and put in place a strategy to ensure that the country is meeting the regulatory and standard demands of the North without compromising its own growth needs. Instead of merely being a rule-taker, the country has a once-in-a-decade opportunity to build standards and rules on greening supply chains. This must be done while ensuring that India’s growth is not interrupted by a lack of capacity or policy uncertainty.

There are three main areas that the country needs to focus on from a policy perspective in the short term to evolve from being a standard taker to a standard setter in the global economy. First, many analysts have noted the deepening fragmentation caused by competing standards that have been developed in isolation around the world. To be part of the standard-making process, India must make efforts to create a more cohesive standards ecosystem and therefore participate in international rulemaking even as it fills its own policy gaps. Rather than reinventing the wheel, it can recognise and elevate best practices such that they are more responsive to the Indian context. Instead of fragmented industry efforts for voluntary compliance, a concentrated push by the public sector to identify and promote specific standards, or their Indian variation (with the necessary equivalence agreements), will give a boost to more SMEs and not just the usual beneficiaries.

Second, India can be a pioneer in encouraging circular-economy activities through better implementation of policies such as the E-waste management standards notified in 2022.^[28] These policies, among others, are essential for India’s plans to become resource-secure by diversifying its energy basket and critical mineral sources. Investing in the right technologies here should be central to India’s green policy basket.

Third, the country must reflect on how to approach these issues at the WTO. Beyond a point, both India and its partners cannot afford its absence at the decision-making table. The last thing that international trade needs is more exclusive international rule-making. This is also represented by those party to the discussions on the Environmental Goods Agreement at the WTO.^[29] The 18 parties representing 46 WTO members are largely from the Global North. The only non-European, non-OECD members of this discussion are China, Hong Kong, Chinese Taipei, and Singapore. Ensuring that no binding rules are agreed to on India’s behalf must remain an important part of its strategy as it considers strengthening its presence at the WTO.

Private Means for a Global Good

The private sector has a resource and decision-making advantage that the public sector may not always have. Incentivising investment in R&D for sustainable supply chains, marketing them to scale, and getting that first-mover advantage are some of the key factors driving private sector interest in climate and trade. India is in a better position as some of these climate-smart industries are new, and there is a valuable opportunity to attract greenfield investments for growth and job creation. Having a workforce skilled in climate-smart technologies will be an overall advantage from both a manufacturing and a services perspective.

In the Indian context, however, cost is always a deciding factor. The green shift in supply chains must be affordable for the lowest common denominator. MNCs alone—which are few and far between—cannot be relied on to underwrite the shift. Public sector effort would be key.

Recommendations

1. One way to ensure efficient public policy could be to create gradations within incentive structures. For instance, Production Linked Incentive (PLI) schemes could provide more advantages to those entities that are attempting to deliver results through more climate-friendly means. This would be the primary method to initiate ‘jigsaw diplomacy’ with the private sector as a central stakeholder.
2. Ensuring that FTAs are approached in a manner wherein access to new technology and products required to manufacture climate-smart products at home is expanded. It would help achieve the ‘conscious consensus’ scenario explained above and reduce the chances of devolving to the Comparative Advantage scenario.
3. Methods must be explored to incentivise investments from companies abroad that are already in the field and can build local capacity. Tesla’s negotiations to enter the Indian market are a case in point and indicative of an overt type of trade negotiation between the private sector and the government. It could be seen as an element of the status quo
4. Climate technology must be prioritised as an important area of cooperation. It is not enough to preach the use of electric alternatives and non-traditional fuels when the production of electricity itself is done through climate-negative methods. Take the example of electric vehicles in India across both public and private transport. The entire value chain, from the electricity supply to the presence and production of charging stations, would need to be overhauled. This is because the generation of electricity itself is not yet carbon-neutral but fossil fuel-dependent. The shift would require an increase in domestic infrastructure investment, which may be further complicated by India’s federal structure. Concentrated effort and common frameworks would first have to be developed domestically and then encouraged at scale. The push for solar energy in India is a positive example of this.

Overall, India needs a more forward-looking approach to the climate implications of its trade policy to ensure adequate incentives and investments in sustainable manufacturing and trade practices. The scenarios presented in this brief will have to be balanced with the growth needs of the country as it plans its next decade of growth. This is essential also to ensure the supply of critical commodities like rare-earths and their processing, which implicate new sectors of the economy heavily—from semiconductors to green technologies. 

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Jhanvi Tripathi is Associate Fellow, Geoeconomics Programme, Observer Research Foundation.

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All views expressed in this publication are solely those of the author, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.

Endnotes

^[a] ‘Carbon competitiveness’, according to the WEF, is ‘the interaction between carbon climate efforts and their impact on traded products and services in the global economy’ (World Economic Forum 2023)

^[b] ‘Carbon leakage’ refers to the phenomenon of companies shifting production to countries with emissions policies that are weak. (World Economic Forum 2023)

^[c] Article XXI of the GATT Agreement allows for exceptional scenarios in which countries can move away from WTO rules. The most visible example of this in recent times has been the US invoking national security to raise tariffs in 2025.

^[1] World Trade Organization, “WTO Matrix on Trade-Related Measures Pursuant to Selected Multilateral Environmental Agreements (MEAs),” n.d., https://www.wto.org/english/tratop_e/envir_e/envir_matrix_e.htm

^[2] United Nations Conference on Trade and Development, Trade Regulations for Climate Action? New Insights from the Global Non-Tariff Measures Database (UNCTAD, 2023), https://unctad.org/system/files/official-document/ditctab2023d5_en.pdf.

^[3] C. Knebel and R. Peters, “Non-Tariff Measures and The Impact of Regulatory Convergence in ASEAN,” in Regional Integration and Non-Tariff Measures in ASEAN, eds. L. Y. Ing, R. Peters, and O. Cadot (Jakarta: Economic Research Institute for ASEAN and East Asia, 2019), 65─89.

^[4] Organisation for Economic Co-operation and Development, OECD Glossary of Statistical Terms (Paris: OECD Publishing, 2008), https://doi.org/10.1787/9789264055087-en.

^[5] International Organization for Standardization, “ISO - Standards,” n.d., https://www.iso.org/standards.html.

^[6] United Nations Conference on Trade and Development, “Trade Regulations for Climate Action? New Insights from the Global Non-Tariff Measures Database,” UNCTAD, 2023.

^[7] World Trade Organization, “Notifications – ePing SPS&TBT Platform,” n.d., https://www.epingalert.org/en/FactsAndFigures/Notifications.

^[8] World Trade Organization, “Search Notifications | WTO – EDB,” n.d., https://edb.wto.org/search?field_agreement%5B%5D=13521&field_year%5B%5D=2022&search_api_fulltext=&field_ics_hs_code=.

^[9] World Trade Organization, “Notifications - ePing SPS&TBT Platform,” https://www.epingalert.org/en/FactsAndFigures/Notifications.

^[10] World Trade Organization, “Homepage | WTO – EDB,” n.d., https://edb.wto.org/.

^[11] World Trade Organization, “Search Notifications | WTO – EDB,” n.d., https://edb.wto.org/search?field_agreement%5B%5D=13521&field_year%5B%5D=2022&search_api_fulltext=&field_ics_hs_code=.

^[12] World Trade Organization, “WTO Environmental Database,” n.d., https://edb.wto.org/.

^[13] World Trade Organization, “WTO Environmental Database.”

^[14] Organisation for Economic Co-operation and Development and World Economic Forum, Emissions Measurement in Supply Chains: Business Realities and Challenges (2023), https://www3.weforum.org/docs/WEF_Emissions_Measurement_in_Supply_Chains_2023.pdf.

^[15] World Trade Organization, “Members – ePing SPS & TBT Platform,” n.d., https://www.epingalert.org/en/MemberProfiles/Profile?countryId=C356

^[16] International Organization for Standardization, ISO 14021:2016 Environmental Labels and Declarations, n.d., https://www.iso.org/standard/66652.html.

^[17] Compliance Gate. “Mobius Loop Guide,” n.d., https://www.compliancegate.com/mobius-loop-guide/.

^[18] Arbor, “80+ Sustainability Statistics for 2026: Ultimate List,” n.d., https://www.arbor.eco/blog/sustainability-statistics.

^[19] Hans Wiesmeth, Implementing the Circular Economy for Sustainable Development (Elsevier, 2021), https://doi.org/https://doi.org/10.1016/B978-0-12-821798-6.09996-8.

^[20] Danial Vargas, Talita Pinto, and Cicero Lima, The Green Transition: The Bioeconomy and Conversion of Green into Value (Fundação Getulio Vargas, July 2023), https://agro.fgv.br/sites/default/files/2023-09/eesp_relatorio_agro-bioeconimia_eng-ap1_v1%20Completo.pdf.

^[21] Keith E. Maskus, Tsunehiro Otsuki, and John S. Wilson, The Cost of Compliance with Product Standards for Firms in Developing Countries: An Econometric Study, World Bank Policy Research Working Paper No. 3590 (Washington, DC: World Bank, 2005), http://hdl.handle.net/10986/8961.

^[22] Leora Klapper and Natascha Beinker, “Smaller Businesses Lack the Financing to Be Sustainable. Here’s How We Can Help,” World Economic Forum, February 7, 2020, https://www.weforum.org/agenda/2017/11/smes-need-financing-to-improve-their-sustainability-practices-here-s-how-we-can-help/.

^[23] World Economic Forum and Boston Consulting Group, What Future for Climate and Trade? Scenarios and Strategies for Carbon Competitiveness (2023), https://www3.weforum.org/docs/WEF_What_Future_for_Climate_and_Trade_2023.pdf.

^[24] World Economic Forum and Boston Consulting Group, What Future for Climate and Trade?, 2023.

^[25] Renita D’Souza, “Developing a Green Taxonomy for India: A Rulebook,” Observer Research Foundation, December 1, 2021, https://www.orfonline.org/research/developing-a-green-taxonomy-for-india.

^[26] Ministry of Commerce, Government of India, Indian National Strategy for Standardisaton, 2018, https://commerce.gov.in/wp-content/uploads/2020/02/MOC_636655449469105249_INSS_Booklet_2018.pdf.

^[27] World Trade Organization, “WTO Publishes Report on Trade and Environment,” December 2, 2023, https://www.wto.org/english/news_e/news23_e/publ_02dec23_e.htm.

^[28] Ministry of Environment, Forest and Climate Change, Government of India, E-Waste Management Rules, 2022 (Central Pollution Control Board, 2022), https://cpcb.nic.in/e-waste/.

^[29] World Trade Organization, “Environmental Goods Agreement,” n.d., https://www.wto.org/english/tratop_e/envir_e/ega_e.htm.

• International Trade and Investment
• European Union
• India
• Climate-trade nexus
• developed vs developing divide
• European Union sustainability standards
• India climate policy
• India–EU Free Trade Agreement
• manufacturing decarbonisation
• non-tariff barriers
• World Trade Organization

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