Download Impact of Climate Change on South Africa`s

Impact of Climate Change on
South Africa’s Future Trade
Relations
Dr Brendan Vickers
Chief Director: Research and Policy – ITED
Department of Trade and Industry
Presentation to the Portfolio Committee on Trade
and Industry, Cape Town
11 November 2011
Trade and Climate Linkages
• Climate change physically affecting trade (patterns
and volumes).
• Trade affecting climate change:
– Directly: international transport contributing to GHG;
– Indirectly: trade-induced growth affecting production and
policy priorities.
• Climate change policies affecting trade.
• Trade policies as mechanisms to address climate
change.
2
Context for UNFCCC Negotiations
• Trade not formally part of UNFCCC agenda.
• But UNFCCC, KP and Bali Action Plan (1b-vi) on
economic and social consequences of response
measures to mitigate climate change,
i.e. measure to address climate change may imply
changes in the conditions for trade.
• Not only an issue for oil-exporting economies, but all
developing countries.
• Shifting global competitiveness from North to South is
the appropriate context to understand the response
measures debate (same as WTO’s DDA).
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Climate Policies Affecting Trade
• Border carbon adjustments (to prevent “leakage” of
trade to more carbon-intensive economies).
• Subsidies (affecting production costs of climatefriendly technologies; allocating free allowances in
emissions trading schemes).
• NTBs (public and private) – technical regulations
and product carbon footprint (PCF) standards.
• Bunker fuels (aviation and maritime).
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Challenge 1: Carbon-intensive Exports
Rank
2010
Product
Proportion
Growth
Name
%Total
1
Basic non-ferrous metals
39.40%
43.19%
2
Basic iron & steel
13.02%
23.75%
3
Motor vehicles, parts & accessories
10.27%
9.19%
4
Machinery & equipment
7.03%
9.91%
5
Basic chemicals
5.73%
11.34%
6
Food
3.67%
4.03%
7
Other industries
3.39%
-2.13%
8
Coke & refined petroleum products
2.55%
-8.67%
9
Paper & paper products
2.24%
8.03%
10
Other chemicals & man-made fibers
1.95%
-3.70%
Source: Quantec, 2011
2009-2010
Challenge 2: Geography
(i.e. trade-weighted distance)
Case 1: South Africa and BCAs
• No current BCAs, although proposals in OECD:
– America Clean Energy and Security Act (ACESA);
– EU 3rd Phase ETS: 164 sectors covering 80% of its imports;
– BCA pressures in Canada, Australia, Japan…
• But country/sector caveats to ACESA:
– Multilateral treaty with USA-equivalent economy-wide binding
targets for emissions reduction;
– LDCs (e.g. Lesotho);
– Bilateral or plurilateral sector agreements with USA;
– Sector > GHG intensity than USA.
7
South African Exports of Sensitive
Products to the EU, 2007-2009
8
Impact on EU-SA Trade?
• TDCA, GSP means lower trade barriers into EU
market
• Raises trade barriers relative to our competitors.
• Impact on current trade negotiations (e.g. EPA)?
• Targets: mining and beneficiated minerals,
manufactured goods, food and tobacco.
• ICTSD: 28.1% of our exports to the EU will attract
taxes, with 30.75% of exports destined for EU.
• SARi: potential cost of EU/USA BCAs to SA exporters
could rise to over US$720 million per annum based
on current exports.
• Most affected are gold, platinum, iron and steel.
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Case 2: South Africa and PCF Standards
• PCF standards focus on the amount of carbon
(GHGs) emitted in the life-cycle of a product to
control trade in “embodied carbon”.
• Unlike BCAs, cover consumer goods, not
commodities.
• Predominantly food items and textiles.
• SARi: value of trade estimated to be at risk of loss
as a result of private carbon labels is US$63.3
billion, largely in food products to the EU.
• Wine exports: bulk exports risk job losses and R400
million revenues for packaging/upstream industry by May
2012.
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Towards COP17/CMP7?
• Adopt work programme and establish Forum on
Response Measures.
• Build “mutual supportiveness” between the UNFCCC
and WTO regimes.
• Advance SA’s position on the above matters.
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QUESTIONS?
[email protected]
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