This publication, Local Content Requirements and the Green Economy, is a product of the Trade Environment, Climate Change and Sustainable Development Branch, DITC, UNCTAD.

It was commissioned for and forms part of the background documentation for an ad hoc expert group, entitled: “Domestic Requirements and Support Measures in Green Sectors: Economic and Environmental Effectiveness and Implications for Trade”, held in Geneva on 13 and 14 June 2013.

The study is far from an exhaustive examination of these issues. In many areas, the analysis is speculative, aimed at raising questions and suggesting areas where domestic and international policy makers may need to consider undertaking further analysis. Above all, it should be stressed that the study raises these matters at a very general level.

Whether any given governmental measure is consistent with WTO rules is a highly contextual question, that may well depend on the exact design features of that particular measure, and its broader context – regulatory, technological and commercial. Thus, nothing in this study should be considered as a judgment that any actual measure of any particular government violates WTO rules.

The study and the meeting are part of a larger effort by UNCTAD to analyze issues arising at the intersection of green economy and trade policy. The study has been prepared at a time when the “green economy” concept moved from theory to practice, with a range of developed and developing countries placing local content at the heart of their green economy strategies, and their green economy plans at the heart of their industrial policies.

It reflects developing countries’ increasing emphasis on the “sustainable” element of traditional development objectives, such as rural development, urban planning and industrialization.

The study has also been prepared at a time when countries across the income spectrum are taking a fresh look at local content requirements, after having largely phased them out in traditional strategic industries such as fossil fuel energy and automobiles.

• What do we know about the economic and environmental effectiveness of performance requirements in green sectors?

• Do performance requirements provide a compelling business case, with short- and long-term returns?

• Is there anything unique about renewables that makes them a special case for performance requirements?

• Does the politics of accommodating the higher cost of renewable energy demand a clear-cut avenue towards job creation through localization?

• Does greening the value chains provide a new rationale for performance requirements?

• Can better governance play a role in dealing with protectionist elements of support measures?

• Are there any upsides for developing countries in a world where performance requirements are extensively used?

Objective evidence on the economic and environmental effectiveness of trade-related measures such as subsidies or local content requirements can provide the answers.