Exploring the Trade Impacts of Fossil Fuel Subsidies (GSI)

In recent years, growing attention has been given in various contexts to fossil fuel subsidies and the need to reform them. Discussion on the topic, however, has focused almost exclusively on the environmental impacts of these support measures. This paper focuses on another, much less explored aspect: the trade impacts of fossil fuel subsidies.

Despite the obvious trade implications that fossil fuel subsidies can have, those impacts have not yet been discussed in detail. After an overview of the current state of the literature on the topic, the report presents a conceptualization and explanation of the various pathways through which fossil fuel subsidies can affect trade at different stages of fossil fuel product value chains, and then looks at empirical evidence to shed light on the potential scale of those trade impacts. It also presents a series of options for how the WTO could engage more with fossil fuel subsidies and contribute to advancing their reform. To read the full report, refer to the IISD website.