Trade and sustainability

Subsidies can help address market failures, such as underinvestment in low-emission technologies and climate solutions. However, if poorly designed, they may fall short of achieving environmental or policy goals and distort competition at both domestic and international levels. The OECD provides one of the most comprehensive datasets on government support across sectors, including agriculture, fisheries, manufacturing, and fossil fuels. Through robust research and stakeholder engagement, OECD work examines the environmental impacts of existing subsidies and the role of support measures in advancing environmental objectives. This helps policymakers better align subsidies with the pace and scale of the green transition, while balancing equity goals and reducing trade distortions.

Raw materials like lithium and cobalt that are essential for renewable energy, electric vehicles, and digital technologies are often concentrated in just a few countries. As demand surges, international trade plays a crucial role in ensuring access to these critical raw materials. However, many export restrictions risk reducing output by undermining the economic viability of extractive industries. While some of these restrictions aim to achieve environmental or social goals, they can also create unnecessary barriers to trade and hinder the global energy transition.

As environmental considerations for supply chains grow, there are new requirements to measure, report, and verify the environmental footprint of the products traded at the border. However, fragmented regulations across countries can raise trade costs and complicate verification at the border, especially since environmental attributes are not physically visible in traded goods. OECD work explores how trade facilitation tools, such as transparency of trade-related information, adoption of international standards, and digital data exchange, can reduce administrative burdens, lower trade costs, and build consumer trust. It also supports efforts to facilitate trade in environmental goods and services, and enable the economies of scale needed for a viable circular economy, from recycling lithium-ion batteries to plastics.