Discuss this articleShare your views with other visitors, and read what they have to say
As negotiations accelerate in the lead-up to the Copenhagen climate change conference in December, trade-related issues have emerged as key elements of the discussions.
The debate has tended to treat climate change and trade policies as either friends or foes. A new ICTSD study took up the challenge at its entry point, focusing on the five central pillars of the upcoming talks: the need for (i) a long-term vision for co-operative international action, including a shared goal for greenhouse gas emissions reductions; (ii) climate change mitigation; (iii) adaptation to climate change; (iv) technology; and (v) financing.
Achieving the long-term goal will come at a cost. While the final price tag and the way it will be shared across countries and sectors remains uncertain, the international distribution of the financial burden is at the centre of the climate change negotiations. Economics will largely determine the international community’s post-Kyoto climate response.
As UN member states embark on the road to Copenhagen, three inextricably intertwined categories of economic and trade-related concerns are likely to influence the negotiations:
- incentives for participation by developing countries;
- ‘carbon leakage’ and competitiveness in industrialised countries; and
- developing countries’ trade and development concerns.
The success of developing country participation in a post-Kyoto climate regime depends on the extent to which financing and technology transfer will help them mitigate emissions and adapt to warming temperatures. The climate convention secretariat has estimated that by 2030, developing countries will need between US$28 billion to 67 billion to respond to adaptation needs, corresponding to 0.2 to 0.8 percent of global investment flows or 0.06 - 0.21 percent of projected global GDP in 2030. Three trade policy areas are relevant to discussions related to financing: subsidies for clean technologies, investment and aid for trade.
Carbon leakage (i.e. firms relocating production in countries with less stringent pollution standards) and related competitiveness concerns in industrialised countries also have critical implications for the negotiations. Although not formally part of the equation, the threat of unilateral measures, such as border taxes, could complicate talks in Copenhagen (see related article on page 19).
This is already visible in discussions on so-called sectoral agreements, which would cover energy-intensive and heavily trade-exposed industries such as steel, aluminium, pulp and paper, cement and agro-chemicals worldwide. While some argue that a sector-by-sector approach would focus emissions-reducing efforts where they would be most necessary and efficient, as well as least costly, certain developing countries see the approach as opening a backdoor to new standards and obligations that would hurt their exports.
The third set of issues focuses on the trade and development concerns of developing countries in certain economic sectors that are likely to be negatively affected by either the physical impacts of climate change or the socio-economic consequences of response measures. The physical impacts, from more frequent and intense weather events to changing patterns of temperature and precipitation, will be felt disproportionately by the poor, who are both most exposed and least equipped to cope. If the Intergovernmental Panel on Climate Change is right, rain-fed agriculture in several African countries will decline by 50 percent by 2020. Meanwhile, farms in more temperate regions might increase their output. The World Health Organisation has estimated that climate change already causes some 150,000 deaths a year through increases in crop failures, flooding, malaria and diarrheal diseases (see page 20).
The ICTSD policy discussion paper, entitled Climate Change and Trade on the Road to Copenhagen provides in-depth analysis on all facets of the debate. The study can be accessed at http://ictsd.net/i/publications/40603/. Hard copies are available from ICTSD.
Add a comment
Enter your details and a comment below, then click Submit Comment. We’ll review and publish the best comments.