HOW TRADE RULES CAN SERVE THE ENVIRONMENT

By Pascal Lamy Reprint | | Print |

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GENEVA , Dec 20 2007 (IPS) - The relationship between international trade -and indeed the WTO- and climate change would be best defined by a consensual international accord on climate change that successfully embraces all major polluters, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). In this article, Lamy writes that until a truly global consensus emerges on how best to tackle the issue of climate change, WTO members will continue to hold different views on what the multilateral trading system can do on this subject. The WTO tool-box of rules can certainly be leveraged in the fight against climate change, but they would need to be mobilised under clearer environmental parameters, which only the environmental community can set. In the absence of such parameters, the WTO will continue to be pulled from left to right by different players, with only a faint possibility of landing in the centre.

Many questions on the issue were raised during the recent United Nations Conference on Climate Change in Bali (3-15 December) but no practical answers were provided – at least none on which everyone could agree.

Some would like to see the trading system offset any competitive disadvantage suffered in the course of climate change mitigation. There are many different ideas circulating on what these ”offsetting” measures might be, with most of the discussion naturally focusing on countries’ most trade-exposed, energy-intensive economic sectors, like iron and steel and aluminium. Some are considering the imposition of domestic carbon taxes, with adjustment for those taxes at their border, others are contemplating emission cap-and-trade systems, with an obligation on importers to participate. Another group would prefer to focus on what is most immediately ”deliverable” by the trading system in the fight against climate change, meaning the opening of markets to environmental goods and services, especially those relevant to climate change, through the ongoing Doha Round of trade negotiations.

Another controversial issue is the international trading system’s carbon footprint. A new concept is that of ”food miles”, a calculation of the CO2 emitted during international transportation of food from the field to the table. Many conclude that it may be better to simply produce goods at home to minimise emissions, but this argument does not always stand up to empirical verification. In fact, 90 percent of internationally traded goods are carried by sea, which is by far the most carbon-efficient mode of transport, with only 14 grams of CO2 emissions per tonne kilometre. Next most carbon-efficient is train transport, then road transport. The least efficient is air transport, rated at a minimum of 600 grammes of CO2 per tonne kilometre.

In working towards an international accord on climate change, countries will certainly have to reflect on the role of international trade within such an accord. Trade leads to efficiency gains, allowing countries to specialise in what they are best at producing and to economic growth, offering countries the possibility of investing in pollution prevention and abatement if they take the political decision to do so.

The WTO tool-box of rules can certainly be leveraged in the fight against climate change. The WTO has rules on product standards for instance, that encourage its members to use the international norms set by more specialised international institutions, as well as rules on subsidies, taxes, intellectual property, and so on. All of these tools can prove valuable in the fight against climate change, but they would need to be mobilised under clearer environmental parameters, which only the environmental community can set. In the absence of such parameters, the WTO will continue to be pulled from left to right by different players, with only a faint possibility of landing in the centre.

A contribution the WTO can make right now is to truly open markets to clean technology and services. The Doha Round of trade negotiations offers an avenue for expanded access to products such as scrubbers, air filters, and energy management services. But, as can be expected, what is and is not an environmental good is a hotly debated matter.

For economists, things appear to be clearer. They tell us that, today, the global market for environmental goods and services is estimated to be worth more than 550 billion dollars per year. The OECD estimates that green services account for 65 percent of this market and green goods 35 percent. Climate change prevention and mitigation products and services represent an important proportion of these numbers.

Launched within a broader context of the Doha Round’s environmental chapter -which also includes issues such as the reduction of fishery subsidies and enhancing the mutual supportiveness between WTO rules and multilateral environmental agreements- the negotiations on environmental goods and services could deliver a win-win result for some our members, for both the environment and trade. (END/COPYRIGHT IPS)