Think Piece

Climate Change and a Renewable Energy Scale-up: Responding to Challenges Posed to the WTO

December 2013
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Actual and potential conflicts between the trade regime and the climate change regime are problematic to both. There is an increasing sense of urgency based on the accumulating evidence from climate science that more effective efforts are needed to mitigate climate change and that trade rules and institutions might be barriers to such efforts. Clarification of the issues and development of options are needed now to facilitate constructive responses in both the trade and climate regimes.

This paper therefore discusses the costs and benefits of options for adjusting World Trade Organization (WTO) rules to provide additional policy space under the General Agreement on Tariffs and Trade 1994 (GATT) and the Agreement on Subsidies and Countervailing Measures (SCM Agreement) for subsidies or other measures to mitigate climate change and promote renewable energy. Eight paths to address this challenge are being explored—amendment of the WTO Agreement; waiver of WTO obligations; agreement on an understanding interpreting WTO rules; plurilateral agreement; litigation in the WTO dispute settlement process; agreement on a moratorium on dispute settlement regarding certain measures; conclusion of a plurilateral agreement; and/or unilateral action.

It is found that whereas a formal amendment would be controversial, difficult and time-consuming, options of a waiver or an interpretative understanding may be more realistic. If it is not feasible to adjust WTO rules, it would be useful to look again at the ways in which current rules provide flexibility for climate change mitigation measures.

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