to greet you on behalf of the Director General of the WTO, welcome you all
to the WTO, and thank you for organizing this conference under our roof. The
initiative taken by the Global Subsidies Initiative, the International
Institute for Sustainable Development and UNEP to organize this meeting, is
an important and timely one.
Climate change is one of the most challenging
environmental and developmental issues of our times. In fact, as Kofi Annan
has put it, this is now a matter of “national security”; Bill Clinton has
put it even more starkly when he said about Climate Change that, “It’s the
only thing that I believe has the power to fundamentally end the march of
civilization as we know it”.
Fossil fuel subsidy reform is undoubtedly one of
the important tools in the hands of the international community in the fight
against climate change. It would accelerate our movement towards renewable,
and less polluting, sources of energy.
International negotiations to fight climate change
are continuing under the auspices of the United Nations Framework Convention
on Climate Change. The Copenhagen Accord, that was dismissed by many at the
end of last year as being a failure, has slowly proved its utility.
The value of this Accord should not be
underestimated. Parties to the UNFCCC “took note” of the Copenhagen Accord,
albeit with certain reservations, and agreed to a particular process that
would flow from the Copenhagen Climate Summit. This process entailed the
notification of targets, actions and financing by a 31 January 2010
deadline. The world’s biggest emitters all met that deadline, with the
result that the Copenhagen Accord is now the springboard from which a
post-Kyoto Protocol regime would eventually emerge.
The Accord is now part of the rich background
landscape of environmental law against which WTO rules would be interpreted
We are now, of course, in a post-Copenhagen
landscape. And these are relatively uncertain times for the climate agenda,
with a big and important milestone looming first at the Cancun climate
summit at the end of this year, and then in South Africa at the end of 2011.
Clearly the international climate negotiation
would be aided were fossil fuel subsidy reform to start taking place on the
side. The G20 has in fact tasked a number of different organizations with
exploring whether and how this reform can be achieved.
In my view, for the international community to
have a better sense of how this powerful reform tool may be deployed, it
would need to begin by answering a few questions.
Allow me to go through some of the ones that I
think would be the most pertinent:
First, what constitutes a fossil fuel
There may be different views on this issue. I would imagine that the
definition could range all the way from the failure to integrate
environmental cost, to the actual suppression of the price of fossil fuels
below production cost. This is a very broad spectrum. Where the definition
lands in that spectrum is as much an economic decision as it is a social
and a political one.
Second, once a definition is established,
would there be some fossil fuels subsidies that the international
community would be willing to tolerate? In other words, would all fossil
fuel subsidies be treated equally in a “reform” process, or are there some
that would continue to be required?
I am thinking here of course of “energy poverty,” such as the about one
and a half billion people who do not have access to electricity, as
estimated by the International Energy Agency. In this background, some
countries may consider it necessary to continue subsidizing the access of
their poorest communities to energy.
Third, how would the international community
actually go about reform and what would be the time horizon? Clearly the
faster the reduction of fossil fuel subsidies, the faster the
international community can progress towards alternative sources of
energy. And, yet, clearly, fossil fuel subsidy reform is not likely to
And, finally, would the WTO rule-book be one
of the avenues employed to achieve the needed reform? This question, you
will note, I have brought up last. I do so deliberately since, in my view,
it would be impossible to answer before we have a clearer response to the
questions previously posed.
The WTO is a legal instrument that we can only deploy when we know where
we are headed. At present, much brainstorming remains to be done.
In general, I see this debate as a continuation of
a conversation the WTO started with the joint UNEP-WTO report on trade and
climate change that was published last year. The report — as controversial
as some may have considered it to be — kicked-off an important dialogue.
Reflections on the link between trade and climate
change, and on the eventual role of the WTO rule-book on an issue such as
fossil-fuel subsidies, must take place. We must prepare ourselves
intellectually for the moment when we may be required to act.
While the WTO has an Agreement on Subsidies and
Countervailing Measures, and an ongoing negotiation under the Doha Round to
improve these disciplines, as well as to establish a specific regime for the
reduction of environmentally harmful fisheries subsidies, fossil fuels are
so complex that they will require much advance planning.
This conference would constitute part of the
preparation for that planning, were a decision to eventually be reached that
the WTO toolbox of disciplines needs to be employed. The interpretation of
the present WTO rules and disciplines is to be done only by the Members of
the WTO or the Dispute Settlement Mechanism. Any new rules would require a
mandate to be agreed by the Members.
I wish you all the success in your deliberations
at this conference, whose results we, in the WTO, will certainly be watching
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