Policy Options Paper

Global Rules for Mutually Supportive and Reinforcing Trade and Climate Regimes

January 2016

As the world intensifies its search for global solutions for climate change, far too little attention has been paid in global policy-making to the nexus between climate change and international trade. In particular, important opportunities for the trade system to contribute to addressing climate change have been overlooked. The overriding message addressed to both trade negotiators and climate negotiators in the present paper is that they must begin by acknowledging the inseparability of the two issues with the aim of framing global rules on trade and on climate that are mutually consistent, supportive, and reinforcing. With this objective in mind, the analysis behind the policy options centres on the interface between national and international measures taken to address climate change and the global rules of the WTO-based multilateral trading system. Where proposed climate rules are concerned, the main focus is on possible approaches that may have trade implications or that may otherwise be affected by the rules or rulings of the WTO. Where current or proposed trade rules are concerned, the focus is equally on the affirmative ways that trade and trade rules can be used to advance climate actions, and on suggesting ways to avoid the potential collisions that may occur with the current trade regime when taking climate actions. The policy options are arranged in six subcategories: maximising the ways trade can address climate change while minimising conflicts between the trade and climate regimes; recognising embedded carbon in trade and revisiting the concept of “like” products; fostering climate action through enabling the formation of climate clubs and coalitions; finding an agreed framework for emissions trading, carbon taxes, and border measures; making use of subsidies, standards, government procurement, and intellectual property; and, fostering sectoral approaches, including maritime shipping and aviation. The paper concludes that the policy options for dealing with the nexus of trade and climate change will only succeed if significant additional efforts are made by the trade and climate regimes to work together on behalf of the overriding global goals for sustainable development.

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