Interplay between Climate and Trade Policies
Harro van Asselt
Summary, in English
INTERNATIONAL trade has become one of the pillars of the global economic system; an overlap between climate change policies and the multi-lateral trading system administered by the World Trade Organization (WTO) therefore seems inevitable. International trade affects climate change as it potentially increases economic activity that may in turn lead to increased greenhouse gas emissions. Conversely, taking measures to reduce greenhouse gas emissions might adversely affect competitiveness and hence reduce countries’ willingness to participate in such measures.1 The WTO Committee on Trade and Environment has only dealt with the interactions between climate change and international trade in a limited manner within the Doha mandate on trade and environment. At the same time, climate negotiations under the United Nations Framework Convention on Climate Change (UNFCCC) have paid very little attention to the relationship of the climate regime to WTO norms. Still, there are a number of important overlaps, which are outlined here.
The Kyoto Protocol establishes three flexibility mechanisms which allow developed countries to comply cost-effectively with their emission limitation and reduction objectives outside their borders: (i) the Clean Development Mechanism, (ii) Joint Implementation, and (iii) International Emissions Trading. These flexibility mechanisms raise several trade issues which have so far largely remained unresolved.