WTO: 2009 NEWS ITEMS

Director-General Pascal Lamy, in the Climate Thinkers Blog of the UN Climate Change Conference, said “personally, I am of the firm conviction that the relationship between international trade — and indeed the WTO — and climate change would be best defined by a consensual international accord on climate change that successfully embraces all major polluters”. This is what he said:

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SEE ALSO:
UN Climate Change Conference blogs

WTO/UNEP Report on Trade and Climate Change

The issue of Climate Change intersects with international trade in a multitude of different ways. While the WTO does not have rules that are specific to energy, or to climate change per se, there is no doubt that the rules of the multilateral trading system as a whole — the WTO “rule book” — are indeed relevant to climate change.

There are many different perceptions of what the trading system ought to do on climate change. While some would like to see the trading system curb its own “carbon footprint,” through the greenhouse gas emissions it generates in the course of the production, international transportation, and consumption of traded goods and services; others are more interested in how they can preserve their own competitiveness under a stringent climate change mitigation regime.

More specifically, they would like to impose an economic cost on imported products at their borders equivalent to the one they suffer in curbing their own emissions. In other words, a “levelling of the playing field” of sorts, based on an importing country's perception of how that field may best be levelled.

Naturally, there are many different ideas floating on what these “offsetting” measures may be, with most of the discussion focussing on countries' most trade-exposed, energy-intensive, economic sectors like iron and steel, and aluminium. For instance, while some policy-makers are considering the imposition of domestic carbon taxes, with adjustment for those taxes at their border; others are contemplating emission cap-and-trade systems, with an obligation upon importers to participate in those systems.

Yet another set of policy-makers would prefer to focus on what is most immediately “deliverable” by the trading system in terms of the fight against climate change. And by this, they mean the opening of markets to environmental goods and services; in particular to those that are relevant to climate change, through the ongoing Doha Round of trade negotiations. And, indeed, with them, I would agree.

These are but some of the ways in which some would position the multilateral trading system on the issue of climate change. Personally, I am of the firm conviction that the relationship between international trade — and indeed the WTO — and climate change, would be best defined by a consensual international accord on climate change that successfully embraces all major polluters.

In other words, until a truly global consensus emerges on how best to tackle the issue of climate change, WTO Members will continue to hold different views on what the multilateral trading system can and must do on this subject. It is only consensual international accord that can take them forward. And this must now be our focus as we march towards Copenhagen.

In the absence of such an agreement, some may be tempted to embark on what I would refer to as “mission impossible”: trying to unilaterally fix a global environmental problem through trade measures. But global problems seldom lend themselves to unilateral fixes, and trade measures may not be the most appropriate response. Ultimately, the fundamental question which the international community must answer is: who will reduce emissions, and by how much. This, while respecting the principle of ”common but differentiated responsibility.“

I am also of the view that the international trading system's carbon footprint must be examined with caution. Much is said in the press everyday about the carbon footprint of international transportation. In fact, a new and emerging concept is that of “food miles.” In other words, the desire of consumers in certain countries to calculate the carbon emitted in the course of international transportation, with many already drawing the conclusion that it may be better to “simply produce goods at home” to minimize emissions.

But such arguments may not always stand up to empirical verification. In fact, 90% of internationally traded goods are carried by sea. And maritime transport is one of the most carbon-efficient modes of transport, with only 14 grams of CO2 emissions per ton kilometre. Furthermore various studies that have looked at the entire life-cycle of products have found that internationally traded goods sometimes carry lower carbon footprints than products that are locally-produced. This is not a surprise in the area of agriculture, for example, where much agricultural production in the North takes place in high carbon-footprint, energy-intensive, greenhouses. Having said that, bunker fuels may come under the purview of post-Kyoto climate regime, thereby internalizing negative environmental externalities.

It is also my hope that countries will put the trade agenda to the service of climate agenda through one of the most obvious ways possible, and in an area in which the internationally community already has a political mandate. I am referring here to the opening of trade to environmentally-friendly goods and services in the context of the Doha Round. At the moment, many climate adaptation and mitigation technologies are on the negotiating table, whose exports in recent years has totalled $165 billion. They include goods such as wind turbines, solar cooking appliances, and photovoltaic cells. We must make this technology more accessible to all.

Let us not lose time in our fight against climate change. Let us put trade to the service of the international climate agenda, focussing now on making Copenhagen happen.

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