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The Progressive Policy Think Tank

‘Special relationship’ can thrive if UK forges new green trade agenda with US at G7 summit – IPPR report

  • UK urged to play a vital role at the G7 to energise green trade agenda
  • Carbon leakage warning as UK revealed to have highest net carbon imports per person in the G7
  • UK can unlock trade deal with US by working with Biden on climate action
  • G7 and COP26 must be a ‘major turning point’ in global trade diplomacy

Ahead of the G7 leaders’ summit in Cornwall, the IPPR think tank is urging the UK to spearhead efforts to rewrite the rules of global trade.

Beyond promoting equitable growth, this new trade agenda should involve wider policy objectives on areas such as tackling the climate and nature crises, strengthening employment standards and promoting democracy and human rights.

In a new report analysing the state of international trade, the think tank says that since the end of the Trump presidency, there is now significant scope for improved global trade diplomacy and an opportunity for the US and UK to work closely together.

IPPR argues that the UK would have a strong ally in forging this new approach to trade in President Joe Biden. This agenda would strengthen the ‘special relationship’ and boost the chances of a new post-Brexit trade deal, according to the report.

IPPR also warns that without building international agreement on this new green trade agenda, there are risks of carbon leakage - where energy-intensive industries in countries with stricter climate policies decide to relocate to countries where rules are looser.  

New analysis reveals that the UK’s net carbon dioxide imports are the highest in the G7 per head at 2.4 tonnes per capita, making this an issue the British government must urgently address. IPPR says carbon imports must be part of countries’ net zero emissions targets.

At the G7 and COP26 summits IPPR urges the UK and US to work together to:

  • Advocate for reform of the World Trade Organisation (WTO) to support the green trade agenda. This should include reducing barriers to trade in environmental goods such as wind turbines and solar panels. The two countries should also promote the idea of a ‘climate waiver’ to allow countries more flexibility to take climate action, such as subsidising green industries, without incurring the risk of trade disputes and tariffs.
  • Work with trade partners to develop joint principles for ensuring that carbon leakage does not undermine emissions reduction targets, including considering the possibility of carbon border taxes.
  • Forge a UK-US trade deal that sets a new global standard for trade deals, with unprecedented environmental, climate, and social ambitions. It should be the ‘greenest trade deal in history’, according to the report. IPPR suggests such a deal could include robust ‘non-regression clauses’ to prevent either country backsliding on high labour and environmental standards.

The report concludes that establishing this new positive model of international trade is also vital for restoring trust and addressing concerns that the existing model of global trade has contributed to a series of social, economic, and environmental harms. This year’s G7 and COP26 summits in the UK are critical for resetting the global trade agenda.

Marley Morris, IPPR associate director, said:

“With a new administration in the US and the beginnings of an independent trade policy in the UK, now is the time to revitalise the ‘special relationship’ with a joint trade agenda to promote climate action, tackle inequality, and safeguard human rights.

“As the UK hosts the G7 and COP26 summits this year, there is a window of opportunity for the government to take on a global leadership role. The UK should make the most of this by working with the US and other trade partners to spearhead efforts to rewrite the rules of global trade. Taking this opportunity could help liberalise trade in environmental goods, address the risks of carbon leakage, and pave the way for an environmentally ambitious trade deal with the US.”

ENDS

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Robin Harvey, Digital and Media Officer: 07779 204798 [email protected]

NOTES TO EDITORS

  1. The IPPR paper, Towards A Progressive US-UK Trade Partnership by Marley Morris and Shreya Nanda, will be published at 0001 on Wednesday 9 June. It will be available for download at: http://www.ippr.org/research/publications/towards-a-progressive-us-uk-trade-partnership
  2. Advance copies of the report are available under embargo on request
  3. Fig 1: Net carbon dioxide emissions ‘imported’ per head, G7 countries (average of the years 2009-2018)

Source: IPPR analysis of Global Carbon Project (2020) and World Bank (2019)

  1. This briefing is the first output of a 12-month IPPR project on US-UK trade and sketches out a starting point for a US-UK relationship which embeds shared climate, nature and social ambitions. In the following stages of the project, we will focus on developing our framework for a progressive US-UK trading partnership in greater depth.
  2. IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence. www.ippr.org