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TWN Bangkok Climate Change Talks Briefing Paper 3


 

Trade and Climate Change: Some summary key points
 

 
 
1.  On the dangers of trade protectionism through using climate as an argument.
 
Climate change is a real problem.  There are links to trade, but climate should not be used as the basis of protectionism.  In this context the following should be stressed.:
 
There should not be attempts to link trade measures such as duties on imports or countervailing duties on the basis of “carbon content” of products or the method of production (i.e. whether a product is produced in an environmental way).  WTO rules at present require that  “like products” are treated in the same way, e.g. you cannot place a different import duty on a product on grounds that it is produced in an environmentally more polluting way than another product.  If imported products are taxed according to carbon or CO2 content then the products of developing countries will be at a disadvantage as the level of technology is not as high as in developed countries, and would generally be produced in a less environmental way..  Thus PPMs (processes and production methods) should not be used to judge a product and “trade related environmental measures” should not be introduced.

NOTE:  French President Sarkosy has said he wants to introduce import duties on products of countries that do not comply with climate commitments.  He could be thinking of the US, but also of developing countries.  In a recent visit to China he gave a warning of this kind.  At present this kind of protectionism has been contained to some degree but is bound to increase.
 
 
2.  On proposals to liberalise Trade in Environmental Goods and Services.
 
The joint proposal by EU and US (made at WTO trade and environment committee)  a week ago and which will be brought to Bali as their contribution is not helpful and has been criticized already by India and Brazil.  It is not an “offer” or concession, but is actually a market-access demand on developing countries to open up their markets.  The proposal is that WTO members commit to zero tariffs on two sets of products (one set of products listed by World Bank as being climate related, and another set of hundreds of products which the US and EU have long ago placed in the WTO committee on trade and environment as a list of “environmental products” which should have accelerated liberalisation (to zero).  Developing countries have for a long time opposed to the long list of products, some of which are not genuinely environmental but included for pure market access issues.  Also, developing countries do not just want to be importers of environmental products but aspire to produce them.  Zero tariff commitment at WTO will render domestic production impossible in many cases. 
 
The analogy of food is useful.  Although cheap imported food through zero tariffs may be seen as useful from one point of view, on the other hand a developing country may want to defend livelihoods of its farmers, and also to achieve a level of food security, and thus many developing countries are defending their right to maintain sufficient tariffs and to have a special safeguard mechanism to face up to the challenges of cheap (and often subsidized) imported foods items.
 
There may be a case for developing countries to import environmental goods and low or zero tariffs at any particular time.  However they need not and often should not
“commit” this low or zero tariff as bound tariff rates in the WTO.  This is because at some time in future (or perhaps at present) the country may want to produce the climate-friendly product, and may require a period of time to have higher tariffs to enable local industry or local agriculture to produce the product.  
 
The EU/US proposal also calls for developing countries to make commitments to open markets to “environmental services”, which include energy, waste disposal, etc.  This is again a demand for opening up and committing several services sectors to foreign ownership and competition.  This is part of the pressure on developing countries to open up their services.  It may be that a developing country may choose to have a certain level of liberalization to foreign participation in certain services.  However it may decide to commit or not to commit to schedule this level of opening in GATS in the WTO.  Some countries do not want to commit because this gives them the policy space to “backtrack” in future if for example there is harm done to local producers, or if they decide in future to develop a local service industry in that service.  Therefore
it is not appropriate for developed countries to pressurize developing countries to commit to full liberalization in environmental services at the WTO.
 
Conclusion:  The EU-US proposal will not be helpful to fight climate change.
 
 
3.  Standards.  Developing countries should also be on guard against the wrong use of standards to give developed countries an unfair advantage.  For example, new standards for all kinds of products (energy, motor vehicle etc)  can serve to block many exports of developing countries.
 
 
4.   IPR rules can be relaxed.  The TRIPS agreement reduces or constrains the ability of governments to obtain technology, as the patents can make the technologies more expensive or unavailable.  Developing countries could be exempted from patents from climate friendly products and the technology or process that makes them..
 
 
5.  Revisit the Doha Round proposals.  To link trade and climate, the demands made in the Doha Round should be revisited.  One of the messages from UNCCC is that countries and communities must build up their resilience to climate change in order to reduce vulnerability.  They need to be strong to adapt to climate change.  The weaker are the communities and countries economically, the less able they are to take adaptation or mitigation measures.  Thus the biggest contribution the trade system can make is to help build their resilience. 
 
Thus the demands of developing countries like G33 in Doha Round are important – to have special products and special safeguard mechanism to defend the food security and farmers’ livelihoods and rural development.  Developing countries must also be able to have their small medium size industries to survive and thrive.  Thus the developed countries should be sensitive to the needs and demands of developing countries at the Doha Round and not stick to their “market access” approach in which they have been putting intense pressures on developing countries to open their markets.  If the “market access” paradigm remains in the North, then the South will continue to face threats to their national economies (agriculture, industry and services) and this makes them more vulnerable in the fight against climate change.    

 

Source:Third World Network
Date:Apr 07,2008