Trade in the service of climate change mitigation: the question of linkage

Abstract

This article takes as its departure point the problem of ‘carbon leakage’. While industrialized countries outsource their most polluting industries, they can pretend to comply with their commitments to reduce greenhouse-gas emissions simply by increasing volumes of imports. Instead of the current fragmentation of the trade and climate change agendas, a more coherent system is needed, in which access to markets is made conditional on the adoption of more robust mitigation efforts, and in which developing countries are supported in such efforts. This article reviews a range of tools that could ensure such coherence, including higher import tariffs for goods produced through methods that do not use the cleanest technologies available, border tax adjustments and ecolabelling schemes. The article concludes that while defining a range of conditions that should be complied with in order to avoid the risk of GHG-reduction related conditionalities being misused for protectionist purposes, WTO law generally allows for meaningful linkages to be established between trade and climate change. It is possible, therefore, to move from the current state of fragmentation of global governance towards greater coherence. Doing so, it is argued here, would serve the cause of climate justice.