A changing global agenda: Climate Change and Trade…

7 September 2009

Globalization has too many times wrongly allowed multinationals to disregard both environment and labour standards. Existing unsustainable production and consumption systems resulted over time inter alia in increased energy use and energy supplies as well as into increased emissions of gas carbon that have contributed to climate change. This is an issue that will be marking the forthcoming global agenda.

In the context of the preparation of the international Conference in Denmark in 2009, a number of development-related issues have been highlighted. The most recurrent (non exhaustive list) relate to the:
(i) intersection between climate change and sustainable development policies, including food security and sustainable agriculture;

(ii) costs of clean technology transfer and its impact on production and exports;

(iii) intellectual property rights related issues;

(iv) commitments on reduction of carbon gas emissions and energy pricing;

(v) special and differential treatment to respond to differentiated levels of responsibilities with regard to pollution between industrialized and developing countries;

(vi) most appropriate measures, i.e., eco-labelling, tax border measures or national plans, to tackle the climate change challenge;

(vii) scope of action at international, at regional and at national level ..

What is the intersection with trade rules and policy?

Persisting imbalances in existing production and consumption models as well as in existing international trade rules intersect with the development aspects of the climate change debates. .
The climate change negotiations will inevitably highlight existing contractions within the multilateral trading system as it regards its sustainable development objective as announced in the Preamble of the Marrakech Agreement Establishing the WTO and its existing rules.

Some intersections include the following main principles and rules:

(i) Processes and production methods (PPMs) and non-discrimination principle. WTO Members cannot discriminate a product on the basis of its production history (i.e., shrimp case);

(ii) Subsidies in agriculture as they encourage overproduction in particular in the industrialized agriculture;

(iii) TRIPS and the transfer of clean technologies and know-how. As IPRs are not owned by Governments but rather by private companies, the issue here how developing countries could benefit from technology transfer. In Bali, it was discussed the possibility of using the same approach used for TRIPS and medicines for clean technology transfer. No agreement was reached on this issue.

(iv) Inappropriate use of tax border measures might also be put in place by industrialized countries to compensate for costs of cleaner technology. This could become a hidden barrier to trade of products originating from developing countries that are produced by multinationals that have their headquarters in the industrialized world. A global fund under the MDGs to finance clean technology transfer was proposed in Bali.

Voices from the South have already stressed that negotiations on climate change should not become an excuse to further limit developing countries’ chances to achieve economic and social development by shifting the burden on them. Therefore, in dealing with carbon emission targets and energy pricing the issues of transparency and development objectives must be taken into account.

By Mariarosaria Iorio
International Policy Analyst

1. For further information on this article, kindly contact: mariaiorio@bluewin.ch.

2. India, Australia and Indonesia have national plans to fix their own carbon targets.
3. Trade negotiations in the framework of the Doha Development Agenda (DDA) are deadlocked. Negotiations on agriculture resumed on 1st October. Issues on the table are: Tariff Quota Creation .This issue has implications for the identification of sensitive products, and smaller tariff reductions. The payment for the smaller tariff reduction is a tariff quota, and if members are not allowed to create new quotas, then only products currently with quotas could be sensitive. Tariff Simplication. Here discussions are on whether or not all tariffs have to be converted into "ad valorem" (percentages of the value of the product). Other issues are: Footnote 5 on the Green Box and non trade distorting subsidies. In October discussions will be on Sensitive Products, the Special Safeguard Mechanism, Cotton, "Blue Box headroom" (allowing the US limits in Blue Box-type support per product that are 10% or 20% more than estimates of maximums under the 2002 Farm Bill). On 2d October Ambassador Luzius Wasescha, permanent representative of Switzerland to the WTO was appointed to replace Ambassador Don Stephenson who took up new duties in Ottawa. In this occasion, the new Chair mentioned how he sees NAMA issues: general architecture, cross-cutting subjects and country specific issues. Consultations will continue over the coming days.