Determining the willingness to link climate and trade policy

Abstract

Analysts have long advocated a linkage between international cooperation on climate change and trade measures, such as border tariffs, as a means of enforcing agreements to achieve deeper cooperation. Nevertheless, it has remained difficult to evaluate whether policy makers will allow such linkages and whether linking climate and trade would, in reality, yield beneficial effects to international cooperation. Working with a large sample of climate experts who are highly experienced in climate diplomacy and policy, we elicited how they view the legitimacy and usefulness of linking trade and climate and what factors can explain those views. We find that experts from richer countries, especially Europe, are more likely to see linkage as legitimate and effective. These experts are particularly likely to favor universal border adjustments (UBAs) that apply to all countries to level the economic playing field, rather than trade measures that define an exclusive “club” of countries making extra efforts to cut emissions while punishing non-club members. This finding reveals tensions between a shift in academic thinking about the value of club-based strategies—including clubs that use border measures for enforcement—and what climate policy experts see as valuable. European experts are particularly likely to favor UBAs and they are also least likely to see risks in implementing trade measures. In general, countries with high quality national institutions see lower risks in using trade measures to enforce greater cooperation on climate change. A particularly robust finding is that experts who perceive their home country’s emissions reduction pledge as ambitious are more likely to see risks from using trade measures. While these are the countries that could benefit the most from using trade measures, they are also the countries that are offering the most under the existing Paris Agreement. Experts seem to be increasingly aware of the dissonance between the voluntarism of the Paris Agreement and growing political pressures to apply trade measures. We also find the attributes of experts, such as training and career experience, can affect their assessments. In some models, experts with economic or business backgrounds are more likely to favor trade measures while those with careers in natural science, diplomacy, and national government are less sanguine. Our results suggest that diverging views on the need for trade-based enforcement are robust, associated with important attributes of countries such as their commitments, and likely to persist—suggesting that policy strategies favoring the use of trade measures must pay close attention to the conditions that will determine where and how trade measures can be implemented. Experts from many countries that are the biggest supporters of the Paris approach to climate cooperation also doubt the legitimacy of trade measures.