Towards Sustainability in Trade, Energy and Climate

Prof. Rafael Leal-Arcas
Jean Monnet Chaired Professor
in EU International Economic Law
and Professor of Law, Queen Mary University of London
(Centre for Commercial Law Studies)


This paper aims at developing effective trade law and policy instruments for sustainable energy and environmental protection with a view to advance current legislation. In the past, trade law has been a very powerful instrument for change in other fields of science. My hypothesis is that trade law can be a tool to help mitigate climate change and enhance sustainable energy. And it is well known that, thanks to trade, countries grow economically. Hence, the triple benefit of trade, which can have a positive economic, environmental and social impact.
This paper challenges the view that trade’s only impact on the environment is negative. On the contrary, my research takes the unconventional view that the trading system goes beyond benefiting the economy and society in that it can also contribute to environmental protection, with a specific focus on decarbonization, which is one of the main challenges humanity faces today. In this sense, my research proposes a paradigm shift in how we approach trade and develops a new theory based on the triple benefit of trade. My paper incorporates the new trend of bottom-up, rather than top-down, solutions to today’s global challenges. My analysis of trade’s potential for environmental protection will:
• Shift the scientific paradigm that trade’s only impact on the environment is negative by proposing the novel idea of using mega-regional trade agreements (RTAs) to mitigate climate change and enhance sustainable energy;
• Explain that a bottom-up approach to governance can give us many answers to scientific issues by bringing forward the novel idea of how greater participation of citizens can be very promising in helping achieve the Sustainable Development Goals (SDGs).
Such an approach will show the potential of the trading system for moving forward many of the SDGs and is likely to create new opportunities and open new windows for further research.
The paper is divided into two phases:
A. Trade agreements a vehicle for climate action and sustainable energy (phase 1)
From energy transit, to technology transfer, to investment protection, renewable energy and trade present interplays across various fields. Phase 1 will investigate the basis for how new trade agreements can better address common concerns. This part of the research will look at what improvements can be made to the trading system to ensure sustainable energy and more efficient energy markets. The state of the art is that there are very few trade agreements with sustainable development chapters. Moreover, there is a lack of scholarship that can inform practice. My hypothesis is that trade agreements can be a vehicle to address global common concerns. Furthermore, my multi-perspective approach will reveal vital insights.
B. Governance from the bottom up: Empowering the citizen in sustainability (phase 2)
The use of behavioral economics in public policy has been increasingly on the agenda. In energy policy, efforts to steer people towards “better”-that is, more energy efficient-choices and behaviors are much needed. There is increasing evidence that the right incentives do spur behavioral change. This has certainly been the case in Nordic countries, where the so-called Nordic model has failed in top-down policies (such as the creation of common defense policy, a single currency), but has been very successful in the design of bottom-up approaches to policies with the right incentives and market integration. The scientific shift in the governance of sustainable development implies putting citizens at the center of this process. The phenomenon of what we describe as a ‘bottom-up approach’ to the democratic implementation of climate change mitigation plans is one of the mega-trends of the 21st century.
How about the governance of international trade? How can it be governed from the bottom up so that there is an open trading system in political, legal, and economic terms? How can we have greater involvement of civil society? How can we empower citizens? Traditionally, trade policy has been conducted by trade diplomats. Should we not listen to citizens’ concerns and those of small and medium enterprises? So, we propose a bottom-up process, with greater citizen participation, which has been a big and unanticipated success since 2016 in the climate change field.

Keywords: international trade, climate change, energy, sustainability, environment.

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