Coordinating UK trade and climate policy ambitions: A legislative and policy analysis

Abstract

The UK Government has pledged to achieve net-zero carbon emissions by 2050 but also champion open multilateral trade and pursue new trade relationships with geographically distant partners. The dynamism of policymaking in both areas, as the UK leaves the EU, provides a useful case study for the larger question of how to reconcile liberal trade policy with a net-zero target. After setting out the relevance of trade policy to the climate target, we examine areas at their intersection: current and proposed UK green subsidies, regulatory trade barriers, potential carbon border adjustment, fossil fuel subsidies and free trade agreements. We apply two analytical tests: compliance with relevant World Trade Organisation obligations and coherence with the net-zero climate target. The analysis is hindered by uncertainty, primarily regarding the extent of future global climate ambition, but there are clear areas in which the UK could strengthen its approach to climate change mitigation without undermining its commitment to open trade. Barring a major increase in global ambition, achieving the net-zero target will, however, likely require new trade restrictions. The implication is that, rather than being situated at the margins, the climate target must comprise a central objective of trade strategy.