Examining Conflicts and Harmonies Between Trade Agreements and Environmental Commitments


There has been a notable transformation in the global perception of climate change. In our interconnected and globalised world, trade has emerged as a prominent factor in environmental shifts. In this rapidly evolving landscape overshadowed by perilous climate change, global trade has taken centre stage, making it imperative to prioritise sustainability and inclusivity. Notably, there has been a surge in the trade of eco-friendly products, even amid a slowdown in global trade overall. Currently, environmental policies are being included in international trade agreements, often leading to tensions between international environmental laws and trade agreements. The World Trade Report of 2022 delves into the prospects of trade as a catalyst for creating a new global  sustainable economy. This paradigm is very important with regard to India as a developing country. India’s foreign trade has crossed the $800 bn mark in the first quarter of 2023. India’s annual average growth rate of environmental goods exports from 2012 to 2021 was 8.3%.  At the COP27 summit, India committed to cutting its ratio of greenhouse emissions to net zero by 2070. To achieve this feat, India has set carbon emission reduction targets for aligning its industry with its climate commitments and also shapes the global trade patterns.  The paper analyses how India’s trade policies can facilitate in achieving its climate goal. The paper would also analyse India’s potential opportunities in its  trade policy to reach closer to its ambitious climate goals.

Keywords: climate change, environmental, sustainability, legal, trade agreements, inclusive , Sustainable Development Goals 


The 21st century unfolds against the backdrop of resource scarcity and environmental constraints, leading us to evaluate international trade from the lens of its societal and environmental repercussions. The global trade patterns are increasingly being shaped by climate change considerations. Within this context, international trade emerges as a potential catalyst for facilitating the global transition to a green economy. This  underscores the necessity of integrating environmental clauses into trade agreements at the bilateral, unilateral, and  multilateral levels. Notably, in June 2023, during the pivotal Trade and Environment Week held in Geneva, it was unanimously agreed upon that trade can contribute sustainably by promoting the transfer of environmentally friendly technologies, enhancing waste management practices, and championing the conservation of biodiversity. As we look at the broader perspective, recent studies conducted by the Food and Agricultural Organization (FAO) affirm that climate change will undoubtedly exert complex and diverse effects on global markets and trade. This is due to climate-induced shifts in transportation costs, competitiveness, and trade policies.

India is a rapidly growing economy whose economic growth has been accompanied by an increase in carbon emissions mainly from the the energy and industrial sectors. The allowing overseas carbon credit trading can expedite India’s emissions reduction efforts. By purchasing carbon credits from other countries, India can offset its emissions in a more effective manner in sectors where emissions reduction is a challenge. Carbon credits refers to the mechanism whereby the carbon emissions are offset through investment in the renewable energy projects such as renewable energy initiatives. India has also taken a leap towards clean energy adoption. This would also foster international collaboration as it would also encourage the exchange of technology for development of sustainable practices. India has moved towards incorporating environmental provisions into its trade agreements over the years, reflecting a growing awareness of the importance of addressing environmental issues in the context of international trade. Officially, India believes that the developing countries can benefit from greater trading opportunities. 

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Author: Sourishree Ghosh