Think Piece

What Has Climate to Fear from Trade?

August 2015
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The long-standing reaction of the trade community to attempts to embroil trade law and policy in the resolution of the climate change issue has been to say, “Solve your own problems on the basis of your own agreed multilateral instruments, and when you have, if there are interfaces or overlaps between your regime and the trade regime, we will find means of resolving them constructively.” While this is understandable, it is rendered impractical, first by that an effective set of agreed international climate mitigation policies, which stand a chance of allowing the achievement of the agreed objectives, is probably as far away now as it has ever been; and second by that the development of domestic politics in both developed and developing countries has revealed trade to be in principle a major source of carbon and political leakage from any aggressive mitigation regime, and thus a serious constraint on national and international mitigation plans.

So it is not as if the climate community has cast around randomly for a potential source of leverage and happened upon trade. The basic presumptions of the trade regime appear to favour the continued promotion of economic development through trade over environmental objectives that require at least some deferral of economic growth, and the premise that any restriction on international trade must be avoided if at all possible. And some World Trade Organization (WTO) principles appear directly to impede actions apparently necessary to build domestic constituencies for stronger climate action. The existence of these principles casts a chilling effect over the development of climate action. If the principles are not adjusted, global climate action may depend even more on national willingness to risk or undertake economic self-sacrifice without regard to perceived fairness—a willingness that is shallow in most countries, and which may remain so until after it is too late to prevent many more decades of damaging climate change.

On the basis of a non-professional understanding of WTO instruments and jurisprudence, the paper suggests five proposals, ranging from GATT Article XX to border adjustment measures that seem to need to be seriously debated. But it adds that even if these changes are accepted, this is self-evidently not a politically realistic prospectus for amended global trade legislation or a revised approach to trade in international climate policy. More indirect approaches, via declarations, guidelines, or the development of jurisprudence, are far more likely to work, though at the expense of long processes and uncertain outcomes when the urgency of climate action is mounting.

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