Transcript What can WTO Law do for Climate Change Mitigation

What can WTO Law do for
Climate Change Mitigation:
Potentials and Limits
Thomas Cottier
Sadeq Bigdeli
Olga Nartova
Sofya Berkutova
NCCR – Trade Regulation
IP6 Project on Energy in WTO Law and Policy
World Trade Institute, Bern
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Agenda
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Tariff Issues
Border Tax Adjustment
Subsidies
TRIPS
Energy Services
Potential of EGS Negotiations
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Tariffs
• A new function for tariffs to achieve level
playing fields?
– How to define environmentally non-friendly
goods? (How to link tariffs with emissions?)
– Would this be allowed under GATT XX (b) or
(g) or the TBT (necessity test)?
• How to avoid sheer protectionism?
– or should Article XXVIII procedure be sought?
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Border Tax Adjustment
• GATT II:2 (a) allows for BTA not in excess of an internal
tax on a product or a tax on input articles
• GATT superfund in principle allowed for an adjustment
for a tax on ‘certain chemicals’ used in the process of
producing products the polluting effect of which
happened abroad (a PPM-based tax?)
• However, the AB may find a violation of Article III
(Alcohol cases and likeness issue) raising the question
of permissibility under ‘general exceptions’.
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Production Process Methods
• Trade and environment debate
• Did the AB on Shrimp give a carte blanche for
PPM-based measures?
• Article III national treatment violation to be
justified under GATT XX?
– Implication: burden of proof shifted to the importing
country
– Back to aims and effect?
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Industrial Subsidies:
ASCM Disciplines
• Prohibited subsidies:
– export subsidies and importsubstitution subsidies
• Actionable subsidies: all ‘specific’
subsidies if they cause ‘adverse
effect’
• Non-actionable: expired in 1999
– limited R&D, Environmental
subsidies and regional subsidies
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Agricultural Subsidies:
Agreement on Agriculture
Domestic Support
1) Export subsidies
(Article 9)
Trade distortive
(Commitment levels)
2) Domestic support:
– Amber Box
– Blue Box
– Green Box
Reduce distortion
(production-limiting programme)
Zero/minimal distortion
Images source: WTO
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Potential Constraints of Subsidies
• Do the ASCM and AoA allow for climate-friendly
subsidies? -- Kyoto 2.1.a (iv):
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Subsidies for energy conservation
Subsidies for RE production or consumption
Subsidies for R&D grants for climate technologies
Subsidies for carbon capture & storage
• Kyoto 2.1 subsidies are not excluded by ASCM
(actionable subsidies – yellow light)
• Reviving the green light category (non
actionable subsidies) in the ASCM agreement?
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WTO and (post)-Kyoto Coherence
• Kyoto 2.1.a (v): “Progressive reduction or
phasing out of … subsidies in all greenhouse
gas emitting sectors that run counter to the
objective of the Convention…”
• High political sensitivity:
– Developed countries: linked to energy security (and
vested interest: Bush’s veto threat)
– Developing countries: energy consumption subsidies
are a major source of CO2 emissions
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TRIPs and Climate Change
• Art 66.2 TRIPS – LDC’s technology
transfer obligation (“shall”)
• MEAs weak technology transfer
obligations
• CDM: incentive for technology transfer
• Incentives schemes for knowledge transfer
required (tax reductions v. export subsidy)
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Energy Services
• Liberalization of services, energy efficiency
and environment – a triple win agenda
• UR insufficient classification in the field of
energy
• New classification proposals and climate
change:
– promotion of cleaner energy - less CO2 emissions
– harmonisation of standards - common energy
efficiency thresholds
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Energy and Environmental
Services
• Both have influence on efficiency of climate
change mitigation measures
• Both underwent structural reform and open to
private operators
• Both need more appropriate classification
under GATS
• Both imply considerable investment
• For both the issue of public service is crucial
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EGS Negotiation - Art. 31(iii) DDA
• With a view to enhancing the mutual
supportiveness of trade and environment,
we agree to negotiations, without
prejudging their outcome:
• …..
• (iii) The reduction or, as appropriate,
elimination of tariff and non-tariff barriers
to environmental goods and services.
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The Environmental Area
Initiative (EIA) Approach
• Multilaterally agreed environmental area
• Services, goods incl. EPPs, TBTs, IPRs,
domestic regulation and other areas
• Goals and targets may be adopted from
Millenium Development Goals (MDGs),
MEAs, and other international agreements
• Result in binding WTO commitments (GATT
and GATS)
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(1) Possible Target Areas and
Clusters
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Supply of drinking water
Drainage
Sanitation and disposal of sewage
Waste disposal, in particular hazardous
waste
• Reduction of carbon emission
• Promotion of renewable energies, in
particular water, solar, wind and tidal
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(2) Modalities within an
Environmental Area
• Members may negotiate any of the following
– Definition of relevant services and scheduling
– minimum number of relevant goods subject to mandatory
reduction (sectoral initiative)
• Tariff elimination on relevant goods
• an overall average tariff cut with minimum cuts at tariff line level
• minimum number of goods with minimum tariff cut
• Separate modalities for EPPs where reductions will
be mandatory
• Coordination across negotiating
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(3) Drafting an EGS Framework
Agreement
• Framework and modalities for undertaking
commitments
• Linkages with existing commitments and
scheduling
• Issues relevant to the environmental sector
(technology transfer, TBTs, IPRs, etc)
• Provisions on transparency, notification, and
dispute settlement
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Linking EGS Negotiations
and Climate Change
• Sectors covered by Kyoto Protocol may provide specific
environmental areas and targets; may adopt from other
parallel initiatives, e.g. Global Environment Facility
• Under the Kyoto Protocol, Members can unilaterally
define priorities and seek CDM projects within the given
structure of service regulations, tariff and NTBs relating to
corresponding products
• EAI approach offers a basis and methodology to do this
multilaterally
• Members can decide on the selection and prioritization of
above project areas for inclusion in EGS negotiations
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Thank you for your attention!
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