Transcript Role of multilateral and regional approaches to international

The Role of Trade in Supporting
International Efforts to Mitigate
Climate Change
WTO Public Forum 2007
Robert Teh
WTO
Initial reactions
 More open trade and efforts to mitigate
climate change can be mutually supportive
•
Green policies at home are crucial
 WTO can contribute to mitigation through:
Successful Doha round
• Liberalization of env. goods and services
•
 More agnostic about the need for changes in
WTO rules
There could be good arguments made for
certain changes
• But demands that arise because of differing
national climate change policies are unwise
•
Source: International Trade Statistics (ITS) 2006
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99
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0
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0
Global Trade Growth, 1950-2005
3000
2500
2000
1500
1000
500
0
Rising trade share
in global output
25
19.4
20
Share of GDP
17.6
15
10.3
10
5.5
5
0
1950
1975
2000
Year
Sources: Maddison (2001) and ITS 2006.
2005
Possible explanations
 Technological improvements
Improvements in transport and logistics
(e.g. containerization)
• Information technology revolution
•
 Trade and investment liberalization
Unilateral liberalization
• Explosion of regional and bilateral trade
agreements
• Multilateral negotiations
•
 “Unbundling” of production
Mechanisms by which
trade can affect GHGs
 Scale effect
•
Trade opening leads to increased output &
hence more energy use (+)
 Composition effect
•
Greater specialization towards
products/services where country has
comparative advantage (?)
 Technique effect
Higher income leads to demand for better
environment (-)
• Improvements in technique of production
leading to less energy use (-)
•
Some implications
 Overall impact of trade on climate change
depend on the strengths of these various
effects
 Strengthening the “technique effect” is
crucial
Trade liberalization
• Increased income
• Specific focus: env. goods and services
• Green policies at home (e.g. appropriate
price of carbon, R & D support)
• Substitution effects
• Investments in clean energy technologies
•
A simulation exercise
 Use a well-known global trade model (GTAP)
to simulate 2 main scenarios:
Trade liberalization only
• Trade liberalization with carbon tax
•
 Caveats:
This is not an endorsement of the model
• Simulation results are used only for
illustration
• Simulation assumes all countries adopt
climate change mitigation measures
•
Simulation results
5.0
Trade Lib. only
Change in CO2
0.0
8.6
Change in Trade
8.8
9.0
-5.0
Trade lib. with "Optimal" Carbon Tax
-10.0
-15.0
-20.0
“Win-win”
9.2