GENEVA, June 26, 2009 (AFP) – A global climate change deal in Copenhagen is crucial to ensure that world trade becomes a catalyst for the greening of the economy rather than an obstacle, trade and environmental chiefs said Friday.

“Business as usual will not prevail,” said UN Environment Program Executive Director Achim Steiner at the launch of a joint report on climate change with the World Trade Organization.

“The transition to a green economy is the backdrop against which trade must evolve,” he told WTO member states at a meeting in Geneva.

Steiner and WTO Director General Pascal Lamy underlined the potentially defining impact on the shape of the world economy of ongoing but separate negotiations on opening up trade and tackling global warming.

“With a challenge of this magnitude, multilateral cooperation is crucial and a successful conclusion to the ongoing climate change negotiations is the first step to achieving sustainable development for future generations,” they said in a statement.

Attempts to forge a new deal on global warming in Copenhagen in December are foundering.

Meanwhile, the Doha round of talks at the WTO has virtually ground to a halt in its long-running bid to expand free trade, mainly to help developing nations.

The report underlined that although free trade could increase carbon emissions by stimulating economic activity, it could also help to reduce global warming by increasing the circulation of technologies to mitigate or adapt to climate change.

But the report on Trade and Climate Change also pointed to potential legal hurdles in WTO rules that could hamper incentives like carbon taxes, emissions trading or subsidies aimed at cutting emissions – all potential ingredients of a Copenhagen deal.

In the absence of a coherent international approach, those measures could be regarded as trade distorting and ruled as illegal depending on the way an individual country applies them.

“In my view the sequence is Copenhagen first,” said Lamy. “That’s where the bulk of the problem lies.”