Future trade battles could be centred on climate and environmental policy

Battle lines are being drawn over how countries handle environmental and climate programs. It’s been suggested that climate programming could be a clever way for governments to funnel money to farm programs and remain under the radar of trade rules.

There’s also the looming discussion of using these programs to “score” commodities on their carbon footprint — potentially creating some real headaches for global supply chains.

Dr. Joe Outlaw, professor of ag economics at Texas A&M, says the European Union has jumped out pretty quickly, talking about providing some sort of carbon scorecard on commodities that could impact negotiated prices. Put another way, climate programs could be being used to add another another round of protectionism in the name of doing right by the world.

Outlaw says, though, that on a global scale, some of these calculations and claims are going to be very hard to prove or even quantify. In 40 years, he says, we still don’t have an agreed upon test or set of evaluations that every region can benchmark against.

“You leave people to their own interpretations or their own company standards, and that gives you an unlevel playing field across the world. And it’s the dumbest thing I think I’ve ever seen, really out of all the ag policy I’ve ever worked on,” Outlaw says. (more after the audio)

The World Trade Organization (WTO) has been the backstop or guardrail for keeping domestic programs and trade on the straight-and-narrow, however the WTO is not seen to have any teeth at this time, he says.

“We have a lot of farmers in this country that are no longer farming, but they have [a land] base, so they’re getting payments when there’s crops that have problems. And so the base is really not allocated 100% where it needs to be. And that’s one of the things in this Farm Bill is going to look at trying to move,” he says, adding that “there’s always this big fear of the WTO. But, frankly, there are people, including myself that say, we need to do what we need to do. And if we get sued, then in the 10 years it takes a case to actually get resolved, we could probably fix what we had changed.”

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