Trade and Climate Change: Proposalfor Reconciling the WTO with Carbon-Reduction TreatiesExecutive SummaryThe relationship between climate change and the rules controlling the international players is an area that has elicited a lot of debate. Some of the trade agreements undermine the ability of governments to implement climate policies in their own countries. The fight for climate change is a battle for the policy makers in trade since if the conditions are not conducive for trade to happen; their profits will dwindle. Developing countries will have to suffer an extra cost on their exports if the playing field is not level with the international partners. All players in the provision of goods and services should price carbon emission costs correctly to ensure market efficiency. The policy and regulatory changes needed should affect both trade and climate change. This should be a global initiative and not just the leading partners. The effort and implement of proper policies by one party will not be sufficient, as their action will be watered down by the activities by the others. This paper looks at the effects climate change has had on business at the local and international level. It also looks at ways in which the World Trade Organization rules and regulations conflict with International conventions on climate change, especially carbon emission reduction. Finally, I attempt to make proposals on how this problem of climate change could be resolved without necessarily causing an imbalance in the markets. Trade and Climate Change: Proposalfor Reconciling the WTO with Carbon-Reduction TreatiesIntroductionFree trade could improve the welfareof many countries. This is rarely achievable though since countries havevarying economic powers. They get into trade agreements with neighbors and havea sort of exchange of resources. These relationships are usually a give andtake with the politics playing a major role. The inter-relation between climatechange and international trade has gravely impacted developing countries. Muchemphasis has not been given to provide a solution to a combined effort toreduce the effects of global warming caused by human intervention. Our actionsnow have far-reaching consequences and will affect generations to come. In the quest to meet the needs of ourrespective countries, we are depleting the natural resources and poisoning theenvironment. This paper will attempt to highlight the potential areas ofconflict between various economic interests and the interventions proposed bythe trade partners and advocacy groups such as Wort Trade Organizations (WTO). BackgroundThe world stands at a crucialjuncture with respect to global economic policy development. Sustainable DevelopmentGoals (SDGs) have been formulated through global governance to bring forth anew perception of the issue of climate change to protect the earths economy,the human race and the environment (Edouard & Bernstein, 2016).Carbon-Reduction Treaties such as the Kyoto Protocol and the Paris Agreement onClimate Change together with the SDGs are examples of currents ways throughwhich world leaders have come together for the sake of saving the world economyby agreeing to join forces and tackle carbon emissions with one voice. The United Nations FrameworkConvention on Climate Change (UNFCCC) is a body of International partners whohave come together to engage on matters concerning the worlds climate. Itstarted as a call to countries to limit global temperatures and control climatechanges and working towards the impact of already existing effects of climatechange (Park, 2016). The Paris Climate Agreement is an accord within the (UNFCCC) was adopted in December 2015. This Agreement deals with greenhouse gas emission mitigation, adoption and finance commencing 2020. The agreement was negotiated by 196 parties and signed by 195 members. The Paris Agreement reached an agreement in 2015 where the signatories concurred to restrict global warming well below 2°C and to pursue further reduction of these temperatures to 1.5 degrees Celsius (Raes, Liao, Chen & Seinfeld, 2010). Each country is expected toformulate policies and implement them the best way they see fit and finallyreport to the UNFCCC on their contribution towards mitigation of globalwarming. They agreed not to set any enforcement mechanisms of this agreement,but they would at the minimum be expected to go beyond earlier set targets.This stance was adopted after it was found impossible to ensure complianceunder the Kyoto Protocol (Gupta, 2014).The concerns about this Agreement are that the current pledges by countries are not going to meet the required quota to meet the global target. Countries are not yet effecting policies to ensure carbon dioxide reduction emissions. The lack of an enforcement mechanism means nothing can be done to anyone who fails to implement policies of engage in activities that are geared towards environmental protection. The agreement was just a promise by the heads of state with no legal binding effect. No sanctions such as carbon tax can be imposed on one for failure of compliance (Park, 2016). Private investors are to take up therole of meeting the Sustainable Development Goal No.13 on ensuring actionconcerning climate change and its impact (Goal 13 .:. SustainableDevelopment Knowledge Platform, 2017). This involves low carbon venturesand clean technology. The governments role in this instance would be limited,and hopefully, the conditions in the business environments in the countrieswould be conducive. The existing trade agreements are oftwo kinds: Regional Trade Agreements (RTA) and Preferential Trade Agreements(PTA). The RTAs are reciprocal agreements between partners. They includecustoms unions, free trade agreements, etc. PTAs are unilateral preferencesthat mean the developed countries are given preferential tariffs on theirimports from the LCDs and other non-reciprocal preferential systems. The mostsignificant area of conflict between the rules in these trade agreements andclimate change is the status of border tax adjustment within WTOs GeneralAgreement on Tariffs and Trade (GATT). At the moment there is no carbon pricingto enable meeting of the objectives of climate change under UNFCCC principles(Park, 2016). Strategies to combat climate changesuggested by partners are many and varied such as: (1) imposing carbon tax orborder tax adjustment. These tax caps are to offset any adverse effects ofcapping carbon dioxide releases into countries that are not executing the Kyotoprotocol. (2) Increased reliance on renewable energies thereby reducingpollution and emission of gases into the atmosphere; and offering inducementsfor energy efficiency and preservation; (3) lowered subsidies for fossil fuels;and (4) transnational transmissions, so developing countries shun burning coal(Park, 2016). Effects of Climate Change onBusiness Rapid climate adjustment threatensthe global economy not so much for the current generation but for futuregenerations. Under the earlier discussed treaties, countries are expected tomeet their targets through national intervention. Their efforts are monitoredand recorded in the International Transaction Log by the United Nations (UN)Climate Change Secretariat to ensure compliance with the protocol. The KyotoProtocol presented 3 market-based instruments to realize the targets by members(Mechanisms under the Kyoto Protocol). These instruments would motivatesustainable growth through skill transfer and investment; remove carbon in anaffordable manner and inspire the privately owned businesses andunindustrialized nations to support the decline struggle. These mechanismsincluded Clean Development Mechanism (CDM); Joint Implementation (JI), andEmissions Trading (ET) (Goal 13 .:. Sustainable Development KnowledgePlatform, 2017).A recent study by James Hansen andother co-authors indicated that the glaciers in Greenland and Antarctica couldbe melting faster than had earlier been predicted. This would mean that within50 years, the sea levels would rise by 1020 feet (2015). This means thatcoastal cities and countries such as New York, Haiti, etc. would suffertremendously. This is just a simple example of what climate change can do to acountry. This is the reason why in 2015, the Conference of Parties (COP21) metin France to discuss International Trade in the face of climate change. Theexpectation was that these partners would nurture development, createbusinesses and improvement progress. Developing countries that still rely onthe natural habitat for their existence are being affected by global warming,therefore, perpetuating more poverty. This leaves them impoverished since theywill not produce any resources to engage in trade. For example, in Africa, tourism is the mainsource of income for the countries with tourists visiting from all over theworld to see wild animals in their natural habitat. Due to the effects ofclimate change, there are wildfires and drought that ravage them killing theanimals discouraging sightseers. The down at the African Coast of Indian Ocean,the fish stock has gone down due to overfishing and the fact that the seatemperatures have increased, it is no longer possible to support the onceattractive marine life (Reiter, 2015). Most of the African nations rely onagriculture for cash crops. This is slowly changing, as there has been amassive loss of biodiversity experienced. Not only will these countries find itdifficult to feed their people, they will have nothing to trade with inexchange for the good and services they lack. For instance, the Tanzanian coastwhich is a central port for trade within the East African community is expectedto rise by 70 centimeters by 2070. This would mean the government revenue willbe affected and so will service delivery to the people. Reconciling the WTO withCarbon-Reduction Treaties In 2010, parties to the MultilateralConventions (WTO, UNFCCC) were unable to reach consensus on reduction ofemissions of heat-trapping gases at the Copenhagen climate conference and atthe WTO Doha Round in 2001 since they involved complex issues. The issue ofcross-linking concessions did not make the discussion easier. There are thosescholars who believe that climate change is brought about by countries failingto observe the environmental cost of production, therefore, the society bearsthe brunt of these actions. There exists monopolies appear as a result of theabsence of intervention or if they do not provide a conducive businessenvironment. At the international level, however, market failure leads to adysfunctioning world economy. As a result of the failure of theDoha and Copenhagen meetings, the U.S and the European Union blamed China andIndia whom they say are the main emitters of CO2 for failing to commit to thereduction of the emissions under UNFCC (Hermwille, 2018). 3 Policy proposalswere fronted as follows:BTAFU: BorderTax Adjustment based on Foreign Unrestricted Carbon Content BTADU: Border Tax Adjustment based on Domestic Unrestricted Carbon Content BTADE: Scenario Efficient Border Tax AdjustmentA tax on Carbon would guaranteeefficacy between producers from countries with high carbon taxes when comparedto with no carbon dioxide emission (Hermwille, 2018).Other trade policy options would include the use of domestic and export subsidies to give national companies an upper hand over international companies. Subsidizing could lead to obligations and subsequently protracted proceedings through the WTO disagreement settlement procedures. If the governments then agree on rights and duties, countries with CO2 reduction policies and existing trade measures may be tempted to reaction as a result of imagined unfair price advantage from countries with policies on carbon reduction (Hermwille, 2018). There exist general exceptionsprovisions within WTO rules and agreement, which would ordinarily be consideredinconsistent with mainstream obligations, which allow trade restrictions oftrade to protect, e.g., animals, plants or health to safeguard finite naturalresources. These processes can be implemented in a general manner avoidingtedious litigation (Hermwille, 2018).The parties could use theTrade-Related Investment Measures Agreement (TRIMS) as a discussed andresuscitated idea. There was a list of export limitations, trade balancingrequirements and home-grown/ local content requirement. TRIMS were a handytrade agreements permitting under developed countries to safeguard theirindustries. It could be used to now protect industries which committed toreduction of CO2 and dubbed Green Trims ++ (Hermwille, 2018).TRIPS (Trade-Related Aspects ofIntellectual Property Rights) have exceptions which could be used to help theleast developed countries to advance. Technology from developed countries thataid in carbon reduction could be acquired through the compulsory licensingclause making it easier for these countries (LDCs). TRIPS could be widened toinclude TRIPS++ (Hermwille, 2018).The other solution would be by usingthe Plurilateral agreements to combine three different sectors as follows: a) energy (goods and services), b)environment (goods and services) and c) trade (Preferential Trade Agreements)and development (Aid-for-Trade, Enhanced Integrated Framework, TRTAs). Thiswould enable the countries to align their trade and development interests to agreen objective (Hermwille, 2018).The WTOs Agreement on Subsidies andCountervailing Measures (SCM Agreement) may be applied to combat the excessivefossil fuel subsidies. This Agreement has general restrictions have previouslynot been effective in limiting fossil fuel subsidies since it has been seen asan expensive endeavor (Hermwille, 2018). Plausible Solutions to ClimateChanges at National and International levelsTo end these problems, there has tobe a concerted effort, especially by all actors both in developed anddeveloping countries. Trade alterations, trade inducements or subsidizationsthat encourage wasteful and unsanctionable trade and industry activities mustcease to exist. The predisposition to create new hurdles touching onrenewables, comprising biofuels, needs to be addressed at the local andinternational level. Have strict requirements concerning the burden of trade measures,which tend to work against sustainable development goals. Doing away withfossil fuel subsidies such as tax breaks, loans, cheap land, etc. that encouragesbig corporations to deplete the non-renewable energy sources as opposed toinvesting in alternative energy sources. Carbon emissions have increasinglygotten out of hand with the fossil fuels burning such as gas, oil or coal.Carbon dioxide is released into the air when these fuels are being produced. Itshould thereafter be re-absorbed by plants and animals, but it is too much inthe atmosphere making the global temperatures rise. This is global warming.These players need to be incentivized to reduce carbon emissions. Trade andinvestments are important in making a difference in markets and spreading them.If the players could be allowed to engage in an open trading system, withagreed rules, the producers of fossil energy would increase on efficacy andreduce wastage.As shown in the below, low carboninvestment may possibly be attained at domestic echelons through stateintervention, industry players, civil societies, private sector etc. (International governance options to strengthen WTO and UNFCCC1, 2011) Source: (Saner, 2011) At the international level,International production organizations should go green. This should be felt atall levels of production and putting in place a verifiable process to ensurestrict compliance of the final outcome or process. Multilateral agreements andcovenants such as Multilateral Environmental Agreements (MEAs) have attemptedto achieve this but with little success. Financial markets both local andinternational could be rewarded for investing in climate adaptation andmitigation. They could be compelled to have an environmental and socialgovernance performance report. This will push them to perform in a moreresponsible way. Tariffs on environmentaltechnologies should be abolished to encourage innovation of environmentallyfriendly technologies accessible to many. Wind turbines, solar panels are someof the examples that come to mind that would help developing countries. TheMontreal protocol is viewed as one of the most successful multilateralenvironmental agreements ever. It has received funding from UNDP, UNEP, and theWorld Bank and spent this money through environmental conservation programs. The Clean Technology Fund is guidedby UNFCC principles and finances clean technology transfers, which was to beused for financing technology transfers. These are all good actions by theWorld Bank, but this has not stopped them from also funding carbon-demandingprojects in line with their normal procedures. These funds are in the form ofloans so they will eventually have to be paid off at a steep cost especially tothe developing countries. This cannot, therefore, be said to be a self-actualizationof the Kyoto commitments. ConclusionTo reconcile trade rules and climatepolicies would require the effort of all global partners including the LeastDeveloped Countries. Governments must take it upon themselves to implement theproposals stated herein and other dictates in the WTO agreements. Bearing inmind that WTO is no longer an efficient negotiating partner, countries shouldengage in regional, bilateral or Plurilateral agreements that support theirpolicies on climate change but at the same time do not stifle internationalchange. A balance can be found where positive climate provisions could findtheir way in trade policies and vice versa.ReferencesEdouard, L., & Bernstein, S.(2016). Challenges for Measuring Progress towards the Sustainable DevelopmentGoals. African Journal OfReproductive Health, 20(3),45-54. http://dx.doi.org/10.29063/ajrh2016/v20i3.9Goal 13 .:. Sustainable DevelopmentKnowledge Platform. (2017). Sustainabledevelopment.un.org.Retrieved 22 April 2018, from https://sustainabledevelopment.un.org/sdg13Gupta, A. (2014). Clean developmentmechanism of Kyoto Protocol. InternationalJournal Of Climate Change Strategies And Management, 6(2), 116-130.http://dx.doi.org/10.1108/ijccsm-09-2012-0051Hermwille, L. (2018). Makinginitiatives resonate: how can non-state initiatives advance nationalcontributions under the UNFCCC?. InternationalEnvironmental Agreements: Politics, Law And Economics. http://dx.doi.org/10.1007/s10784-018-9398-9Park, D. (2016). Legal issues on climate change andinternational trade law. Springer.Raes, F., Liao, H., Chen, W., &Seinfeld, J. (2010). Atmospheric chemistry-climate feedbacks. Journal Of Geophysical Research, 115(D12).http://dx.doi.org/10.1029/2009jd013300Reiter, J. (2015). What does climate change mean forthe future of trade?. WorldEconomic Forum. Retrieved 22 April 2018, fromhttps://www.weforum.org/agenda/2015/12/what-does-climate-change-mean-for-the-future-of-trade/Saner, R. (2011). International governance options tostrengthen WTO and UNFCCC. Retrieved fromhttp://www.diplomacydialogue.org/images/files/20110611-International%20governance%20options%20to%20strengthen%20WTO%20and%20UNFCCC.pdfGet Help With Your EssayIf you need assistance with writing your essay, our professional essay writing service is here to help!Find out more
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