Trade is not just about economic growth — it is also a key tool for achieving global environmental goals. As the world grapples with the twin crises of climate change and ecological degradation, the importance of international trade in environmental goods and services (EGS) has come into sharper focus.
Facilitating the global exchange of EGS is one of the most direct and practical ways to support environmental sustainability, spread clean technologies, and enable countries — particularly developing ones — to transition toward greener, more resilient economies.
Trade Enables Access to Green Technologies
One of the most significant roles of trade in the EGS context is diffusion of technology. Not all countries have the capacity to produce advanced environmental goods — such as solar panels, wind turbines, or carbon capture equipment — at scale. Trade enables countries to import these technologies, speeding up their adoption and deployment where they are most needed.
For example:
- A developing country with abundant sunlight but limited manufacturing infrastructure can import solar energy systems from abroad.
- Countries facing water scarcity can access advanced water purification and desalination technologies via international suppliers.
- Trade in EGS allows for more rapid climate adaptation by enabling cross-border flows of knowledge, expertise, and equipment.
Lowering trade barriers — such as tariffs or complex regulatory requirements — can reduce the cost of these critical goods and services, making green transitions more affordable and accessible worldwide.
Trade Policy Can Lower Costs and Create Incentives
Removing or reducing tariffs and non-tariff barriers on EGS can lead to more competitive pricing, greater availability, and wider market penetration of green products and services. In fact, studies by international institutions such as the WTO and OECD have shown that liberalising trade in EGS leads to:
- Lower consumer and producer prices for clean technologies
- Increased investment in sustainable infrastructure
- Greater innovation, as firms gain access to new markets and compete globally
This is particularly relevant as governments seek to incentivise low-carbon development through tax breaks, subsidies, or public procurement of environmental technologies. Trade policy can complement these domestic measures by ensuring that imported EGS face fewer hurdles at the border.
EGS Are Key to Achieving Climate and Sustainability Goals
Trade in EGS supports a wide range of international sustainability objectives:
- The Paris Agreement depends on widespread deployment of clean technologies — most of which are traded internationally.
- The Sustainable Development Goals (SDGs) explicitly reference the need for environmentally sound technologies, affordable clean energy, and sustainable infrastructure.
- Nationally Determined Contributions (NDCs) under the UN climate regime often rely on the availability of imported environmental goods and services to meet emissions targets.
Trade Helps Spread Standards and Best Practices
Trade in services such as environmental consulting, sustainable engineering, or environmental impact assessments can also help raise standards globally. International providers often bring with them best practices, technical expertise, and regulatory insights that can help importing countries strengthen their own environmental frameworks.
This “knowledge spillover” effect means that opening up trade in environmental services isn’t just about market access — it’s about capacity-building, too.
Trade Must Balance Access, Equity, and Sustainability
While trade in EGS offers clear benefits, it also raises important questions about equity, development priorities, and domestic capacity. For instance:
- Will opening EGS markets too quickly undermine local industries?
- How can developing countries ensure that trade liberalisation aligns with their national environmental goals?
- What flexibilities should exist in global trade rules to support green industrial policy?
These are ongoing debates — and they highlight the need for carefully designed trade frameworks that support sustainability while respecting development needs.
EGSTradeHub.org helps users explore how trade policy can drive environmental outcomes — and what tools, agreements, and strategies are being used to unlock the potential of EGS.