THE CHALLENGE
Limiting global warming to 1.5°C necessitates that greenhouse gas emissions peak by 2025 and drop by 43% by 2030. Trade plays a vital role in achieving this goal, as highlighted at COP28 in Dubai, where trade was given significant attention. The challenge lies in limiting warming effectively, given the urgency (UNFCCC 2023). Autonomous import policies, such as the EU's Anti-Deforestation Regulation (EUDR) and the Renewable Energy Directive (RED), are gaining prominence but present trade-offs between effectiveness and legitimacy.
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The EU's unilateral actions can enhance the credibility of sustainability commitments, leveraging its trade power to drive changes difficult to achieve in multilateral settings. Properly designed and implemented unilateral trade policies can make significant strides in combating climate change. However, these actions face criticism for potential illegality, illegitimacy, and adverse impacts on vulnerable populations. For example, Malaysia challenged the EU’s RED II at the WTO (DS 600), arguing it was discriminatory and overlooked the circumstances of developing countries. The WTO's recent decision largely favored the EU, affirming the legitimacy of its trade policies despite some implementation issues.
Questionable legitimacy can undermine the potential for effective change. Unilateral sustainability actions may attract negative attention and hinder future initiatives. Negative spillovers, particularly in socioeconomic development, could provoke opposition from developing countries prioritizing safety and economic issues over climate concerns. For instance, climate change is a lower priority for Latin Americans compared to safety and economic issues. This raises the question of how to harness the potential of unilateral trade policies for the green transition while avoiding legitimacy issues that could hinder their long-term success.
THE QUESTIONS
Key question: What should and could be done to mitigate the legitimacy issues of the EU’s unilateral/autonomous trade and sustainability regulations and thus foster their positive long-term outcomes?
1) What potential actions by the EU can be considered acceptable by EU constituents and foreign stakeholders alike?
2) What are the on-the-ground heterogeneous effects of existing unilateral policies (e.g. the EU’s RED) that can be used as reference for future policies?
3) What actions can the public policymakers of the EU and foreign countries affected by EU regulations carry out to promote the legitimacy and efficiency of EU rules?
4) To what extent can IOs orchestrate a solution and mitigate the legitimacy issues of unilateral trade policies? In other words, what actions can international civil servants in international organizations (IOs), in particular those in Geneva, carry out to mitigate the potentially negative social impact of unilateral/autonomous rules and boost their positive environmental impact?
5) What legal frameworks and regulatory improvements that are required to carry out a honest brokering role in autonomous trade and sustainability policies?
OUR APPROACH
This project requires a synergic set of instruments and data to o er meaningful research and policy knowledge results. To achieve that synergy, we employ a multi-methods approach. Our main data gathering strategy will comprise three main sets of actors (the public, interest groups and IO elites) and follow a principal-agent theory rationale. First, we approach the overall public via a nationally representative survey experiment. The theoretical logic is that, as trade and sustainability become more salient, policymakers and interest groups must pay increased attention to the preferences of the public (Rasmussen, Carroll, and Lowery 2014) to avoid negative feedback loops and protests. Second, we run a semi-structured interview and focus groups campaigns with producers in Brazil and the EU as well as government and IO o icials. Trade policy is often most salient to interest groups, which are more likely to reap the concentrated benefits of trade (Dür and De Bièvre 2007; Cezar 2022).
Elites, in turn, may have – even if marginally so – entrepreneurship to mold the decisions associated with very technical matters. Even if the salience of a policy increases, its greater complexity is likely to give some autonomy to bureaucrats. While we assume that interest groups and the public will dominate the national/EU debate, international institutions may have greater leeway due to the effect of delegation chains. Finally, we use existing data at the local and firm levels in Brazil to run econometric impact evaluations on the role of existing unilateral trade policies, namely RED, on multiple variables of interest that could point to the positive or negative externalities of trade policies. Our theoretical logic is that the negative spillovers of trade can lead to worsening efficacy of unilateral trade policies (output legitimacy), thus further undermining the legitimacy of such policies.