Climate Change and Trade Policy : From Mutual Destruction to Mutual Support
Contrary to what is still often believed, the climate and trade communities have a lot in common: a common problem (a global "public good"), common foes (vested interests using protection for slowing down climate change policies), and com...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100726084354 http://hdl.handle.net/10986/3862 |
| Summary: | Contrary to what is still often
believed, the climate and trade communities have a lot in
common: a common problem (a global "public good"),
common foes (vested interests using protection for slowing
down climate change policies), and common friends (firms
delivering goods, services, and equipment that are both
cleaner and cheaper). They have thus many reasons to
buttress each other. The climate community would enormously
benefit from adopting the principle of "national
treatment," which would legitimize and discipline the
use of carbon border tax adjustment and the principle of
"most-favored nation," which would ban carbon
tariffs. The main effect of this would be to fuel a dual
world economy of clean countries trading between themselves
and dirty countries trading between themselves at a great
cost for climate change. And the trade community would
enormously benefit from a climate community capable of
designing instruments that would support the adjustment
efforts to be made by carbon-intensive firms much better
than instruments such as antidumping or safeguards, which
have proved to be ineffective and perverse. That said,
implementing these principles will be difficult. The paper
focuses on two key problems. First, the way carbon border
taxes are defined has a huge impact on the joint outcome
from climate change, trade, and development perspectives.
Second, the multilateral climate change regime could easily
become too complex to be manageable. Focusing on
carbon-intensive sectors and building "clusters"
of production processes considered as having "like
carbon-intensity" are the two main ways for keeping the
regime manageable. Developing them in a multilateral
framework would make them more transparent and unbiased. |
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