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What can WTO Law do for
Climate Change: Potentials
and Limits
Thomas Cottier
NCCR – Trade Regulation
World Trade Institute, Bern
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Agenda
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The Role of Law in Climate Change
Foundations
Non-discrimination and Taxation
Tariff Policies
Subsidies
Technology Transfer
Government Procurement
Services
Linkage Issues
Conclusions on Research Agenda
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What Brings International Law to
the Table?
• Framework: A Principled Approach and Exceptions
– Non-discrimination,
– Transparency
– Response to State Failure (Compensatory Constitutionalism,
Multilayered Governance)
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Focus on Procedure (political, judicial)
Dispute Settlement and Enforcement (Sanctions)
Progress Case by Case; Experience
Detailed Regulation Implementing Policies (Constitution
of Markets)
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Pertinent Foundations
• Common Heritage of Mankind (prior to 1992 Rio
Conference)
• Permanent Sovereignty of Nation States over
Natural Resources affirmed
• The Emerging of Principle of Common Concern
beyond National Borders
• The Principle of Precaution
• The Principle of Sustainable Development
• Progressive Liberalization and Regulation
(WTO)
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Linking Climate Change and Trade
Regulation
Adaptation
– Agriculture
–Trade in Water
– Migration
–Structural Adjustment
–Retraining
–Social Security
–Insurance
–Risk Management
Mitigation
– Taxation and Tariffs
– Subsidies
– Technology Transfer
– Energy Services
– Financial Services
–Gvt. Procurement
• Communication
– Freedom of Information and of Speech
– Education, Knowledge Transfer
– Access to Climate Change related Services
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Impact of Non-Discrimination
• Most Favoured Nation Treatment (Art. I GATT)
– Alike Treatment of All 153 Members of the WTO;
exemption of comprehensive preferential trade
agreements
• National Treatment (Art. III GATT)
– Treatment no less favourable of imported like and
substituting products
– Subject to exemptions in particular for the protection
of non-renewable resources, including air and climate
(US - Gasoline)
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Border Tax Adjustment
• GATT II:2 (a) allows for BTA not in excess of an
internal tax on a product or a tax on input articles
• Key issues: Can tax go beyond BTA? Can
product be distinguished on the basis of
Production and Process Methods) ?
• GATT in principle allows for an adjustment for a
tax on ‘certain chemicals’ used in the process of
producing products the polluting effect of which
happened abroad (US – Superfund)
• Differential Treatment on the basis of PPM can
be justified for the protection of global commons
(Art. XX(g) GATT, subject to conditions
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Tariffs
• Tariffs in WTO main Lawful Instrument of Protection
• Tariff Reduction in Industrial Goods reduced on average
from 40% to 4 %; agriculture: >20%)
• Consolidation and Bound Tariffs
• Unilateral Deconsolidation and Compensation
• Issues:
– Should we use tariffs to achieve a level playing in climate
mitigation?
– Should tariffs be deconsolidated and imposed on the basis of
CO2 emission standards of products, and PPMs?
– Multilateral negotiations, unilateral or bilateral approach?
– How to compensate sectoral increases?
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Subsidies
• Do the WTO Agreement on Subsidies and
Countervailing Duties and the Agreement on
Agriculture allow for climate-friendly subsidies? - Kyoto 2.1.a (iv):
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Subsidies for energy conservation
Subsidies for RE production or consumption
Subsidies for R&D grants for climate technologies
Subsidies for carbon capture & storage
• Kyoto 2.1 subsidies are not excluded by WTO
(actionable subsidies – yellow light)
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Technology Transfer
• Art 66.2 Agreement on Intellectual
Property (TRIPs) – LDC’s technology
transfer obligation
• Multilateral Environmental Agreements
have weak technology transfer obligations
• Clean Development Mechanism (CDM):
incentive for technology transfer
• Incentives schemes for knowledge transfer
required (tax reductions v. export subsidy)
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Government Procurement
• Agreement on Government Procurement
(GPA) allows to condition Purchases on
Ecology and arguably PPMs (Product
Specification)
• National Treatment and Equal Opportunity
• Transparency Requirements
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Energy Services
• Enhancing Energy Efficiency by competing
Energy Suppliers
• Enhancing Market Access for foreign
Service Suppliers
• Restriction of Monopolies
• Regulation of Public Services
• Reform of GATS Commitments for Energy
Services required
• Review of Russia’s Terms of Accession
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Financial Services
• Enhanced Market Access (National
Treatment) for global System of Emission
Certificates Trading Required?
• Implications for Financial Liberalization
and Regulation in GATS?
• Implications for Domestic Regulation
under GATS?
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Environmental Goods &
Services Negotiations
• Doha Declaration:
With a view to enhancing the mutual
supportiveness of trade and environment, we
agree to negotiations, without prejudging their
outcome:
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(iii) The reduction or, as appropriate, elimination of
tariff and non-tariff barriers to environmental goods
and services.
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The Environmental Area
Initiative (EIA) Approach
• Multilaterally agreed environmental area
• Services, goods incl. EPPs, TBTs, IPRs,
domestic regulation and other areas
• Goals and targets may be adopted from
Millennium Development Goals (MDGs),
MEAs, and other international agreements
• Result in binding WTO commitments (GATT
and GATS)
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Institutional Challenges
• Decision-making processes:
– Dual approach of ongoing negotiations and
market access rounds
– consensus no longer suitable: weighted
voting? (highly controversial)
• Interface of WTO and MEAs including
Kyoto II unsettled: Integration into WTO
via reference?
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Conclusions
• Precaution Justifies Taking Action against
CO2 Emissions
• Interdisciplinary Research Primarily based
upon Empirical Analysis
• Prospective Models need to take Legal
Framework into Account
• Development of Detailed Rules for
Implementation
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Thank you for your attention!
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