Abstract
Abstract This paper examines whether the climate policy options policymakers are contemplating are compatible with core principles of the world trading system set forth in the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), and Appellate Body decisions. The authors argue that border measures—both import restrictive measures and export subsidies—contemplated in US climate bills and the climate policies of other countries stand a fair chance of being challenged in the WTO. Given the prospect of foreseeable conflicts with WTO rules, the authors suggest that key WTO members should attempt to negotiate a new code that delineates a large “green space” for measures that are designed to limit GHG emissions both within the member country and globally. By “green space,” the authors mean policy space for climate measures that are imposed in a manner broadly consistent with core WTO principles even if a technical violation of WTO law could occur. To encourage WTO negotiating efforts along these lines, the authors recommend a time-limited “peace clause” to be adopted into climate legislation of major emitting countries. The peace clause would suspend the application of border measures or other extraterritorial controls for a defined period while WTO negotiations are under way. Published as Policy Paper
Highlights
The economic downturn poses daunting challenges, but Washington seems eager to take action against climate change
The balance of the auction revenues will be returned to the people, especially vulnerable families, communities, and businesses to help the transition to a clean energy economy”2
A parallel argument has surfaced in the debate over climate legislation and many US climate bills introduced in the Congress have included border measures: they limit on imports from countries that do not have comparable climate policies, and they contain some forms of relief for exports of carbon-intensive products
Summary
The economic downturn poses daunting challenges, but Washington seems eager to take action against climate change. “After enactment of the Budget, the Administration will work expeditiously with key stakeholders and the Congress to develop an economy-wide emissions reduction program to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050. The balance of the auction revenues will be returned to the people, especially vulnerable families, communities, and businesses to help the transition to a clean energy economy”2 During his first official foreign visit, President Obama agreed with Canadian Prime Minister Stephen Harper to launch a new clean energy initiative as a step towards a North American climate change treaty. Leaders have warned that international negotiations on the post-Kyoto regime will be undermined if the United States does not enact domestic legislation to reduce carbon emissions. In his remarks at the climate event held at the US Capitol on March 3, 2009, former British Prime Minister Tony Blair emphasized that the United States must show its seriousness about enacting legislation. Connie Hedegaard, Danish climate and energy minister, said that the world is waiting for the United States to provide leadership. Ambassador Todd Stern,
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