Climate and trade policies: from mutual destruction to mutual support

Abstract

There is no doubt that trade and climate policies can be mutually destructive. But there are three strong reasons to suggest that they can also be mutually supportive: they have a common problem, common foes, and common friends. Mutual support would be much stronger if the world regimes for these two policies shared a few common principles. The climate community should feel at ease with the broad WTO principles of ‘national treatment’ and ‘most-favoured nation’, and rely on them in building its own treaty and institutions. The trade community should grasp the opportunity to benefit from the better disciplines on adjustment policies that it is hoped the climate community will design.These conclusions should put the many pending problems into a more positive perspective, and persuade negotiators to find pragmatic compromises, as was the case with the GATT. Using this perspective, the paper focuses on a few key issues, such as the definition of carbon border taxes and the reasons to ban carbon tariffs. Other cases of mutual support are examined. For instance, the climate community should not repeat the mistakes of the world trade regime in dealing with the developing and least developed countries.

How Could Trade Measures Being Considered to Mitigate Climate Change Affect LDC Exports?

“…Following resistance from especially the US and China, the EU is so far only including flights within the European Economic Area (the EU, Iceland, Norway, and Switzerland) in its ETS. Border adjustment also meets resistance from those concerned that the scheme may be misused for protectionist purposes , Messerlin 2012.…”

The Trade and Climate Change Nexus: The Urgency and Opportunities for Developing Countries

“…Carbon border adjustments can be politically controversial, challenging to reconcile with international trade law, and administratively demanding to implement. A key concern is that carbon border taxes may be misused for protectionist purposes (Brenton, Edwards-Jones, and Jensen 2009;Messerlin 2012). For this reason, any new program will be carefully examined for its consistency with World Trade Organization (WTO) rules and is very likely to be challenged in the WTO dispute settlement system.…”

Climate change and trade policy: from legal complications to time factor

“…It is highly recommended that trade and climate must adopt the path of mutual support which would potentially lead to green and sustainable world. The reciprocal of such policy option may lead the world towards the mutually destructive path (Messerlin, 2012;Hufbauer and Kim, 2010a, b). Based on these arguments, we have constructed a short framework that how climate change implication in terms of trade and vice versa construct or destruct each other.…”

“…Because, the world trade regime believed that such policies may harm the world trading system. However, the recent literature (Stern, 2007;Subramanian et al, 2009;Hufbauer and Kim, 2010a, b;Messerlin, 2012) has produced much positive behavior to set joint policy outcome for mutual interests because the international trade and as well as climate change are important for socio-economic progress of the world (Stern, 2007;Hufbauer and Kim, 2010a, b). It is also largely believed that there is lot of commons in international trade and climate change (Messerlin, 2012).…”

“…Several other commons and positive aspects can be considered while mapping trade-climate policy. There is ample literature available (Shackley and Wynne, 1995;Viguier, 2001;Böhringer et al, 2006;Pittel and Rübbelke, 2008;Hufbauer et al, 2009;Messerlin, 2012;Meltzer, 2012), where the strong hypotheses are being made to benefit the global climate change efforts on the world trade criterion. Hence, there are many reasons to buttress each other.…”