Transcript Climate Change, Trade and Competitiveness

Overview of Kyoto-Trade
Rules Interactions
Aaron Cosbey
Associate, Climate Change and Energy, IISD
Climate Change, Trade and Competitiveness
COP 11/MOP 1 Side Event, Dec. 3, 2005
The Context
• Two bodies of international law, potential for
conflict.
• No conflict has ever arisen, so this is a
scoping exercise in prophylactic analysis.
The GATT
• Use of tariffs, trade barriers: probably illegal,
but also unlikely
• Use of carbon taxes combined with border
tax adjustment: could be a problem. No legal
consensus on this.
• Technically nothing is GATT-illegal if it can be
saved by the Exceptions – Art. XX. This is
the wildcard.
Subsidies Agreement (SCM)
• Subsidies for preferable production, R&D (e.g.,
biofuels, PV solar): no domestic preferences, no
specific enterprises
• Emissions trading: careful with initial allocation –
must reflect market value
• CDM: only an issue if unilateral CDM, government
subsidizes and aims subsidies only at domestic
investors.
Other WTO Agreements
• Technical Barriers to Trade: eco-labelling, energy
standards – voluntary labeling probably OK;
Standards either based on international standards,
or must justify why not
• Government Procurement: as long as no
discrimination involved, probably OK. (may be
saved by Art. XXIII Exception anyway)
• Dispute settlement: where does the dispute go if
there is one?
• EU GSP conditionalities: uncertain legality.
Possible Synergies
• Environmental Gods and Services
negotiations:
– list some goods as “environmental”
– specify CDM use as one defining characteristic.
• Subsidies Agreement Article 8 Exceptions:
can they be revived?
Conclusions
• In most cases, all that is required to avoid
conflict is careful design (BTA might be the
exception)
• There are important areas of potential
synergy – need to be actively pursued
Thank you
TRADE, COMPETIVENESS AND CLIMATE CHANGE:
Exploring the Issues
Aaron Cosbey
[email protected]
www.iisd.org/climate
www.iisd.org/trade
December, 2005
Montreal, Canada