The International Trade Climate Change Interface is emerging as a ‘new issue’

Mar 27th, 2012 | By | Category: CoP17, India, International Agencies, News, UNFCCC

FAISAL AHMED, The Economic Times, India :The Conference of Parties (COP 17) Climate Conference held in Durban in November-December 2011 placed due impetus on some critical issues that emanate when climate change concerns intersect with trade policy issues. In fact, the interface between international trade and climate change is fast emerging as a ‘new issue’ even though it does not find mention in the originally drafted rules of the General Agreement on Tariffs and Trade (Gatt) or the World Trade Organization (WTO).

Some such issues raised by WTO at COP 17 include unilateral trade measures, climate protectionism and border measures, modalities for promotion and adoption of climate-friendly technology, role of intellectual property rights (IPRs), carbon labelling , and use of biofuels. Since developing countries are also under pressure to make such commitments, it would be crucial to revisit some such issues at the upcoming Brics Leaders’ Summit hosted by New Delhi.

The 2011 Brics Summit, which came out with the Sanya Declaration, supported the Cancun Agreement and the mandate of the Bali Plan of Action on climate change. It also called for strengthening modalities of commitments to keep the Kyoto Protocol alive. One concern for developing countries is the unilateral trade measures (UTMs) adopted by developed countries, which could be an arbitrary or discriminatory restriction on international trade practices.

In fact, India’s proposal for the Durban discussion at COP 17 also included this issue arguing that such unilateral measures violate the ‘principle of common but differentiated responsibilities’ as envisaged in Article 3 Para 1 of the United Nations Framework Convention on Climate Change (UNFCCC).

Even China , which has been very active in climate change negotiations , supports the pragmatic implementation of this principle . Also, such practices violate the non-discriminatory principle of the WTO and hamper efforts at strengthening multilateralism. Brazil and South Africa have also shown keenness in renewing the Kyoto Protocol and support the idea of having new emission targets for industrialised countries.

Further discussion on the nuances of adhering to this principle can be undertaken at the Delhi summit , so that a common position of Brics on this issue is formally agreed upon. Related to this is the issue of climate protectionism and border measures being adopted by some developed countries to deal with binding commitments on emissions.

To comply with emission reduction as part of the Kyoto Protocol , the EU adopted an emission trading system, seen as a protectionist measure by developing countries. Border measures could adversely impact the overall export basket of developing countries, and more particularly the export competitiveness of their energy-intensive sectors. A better alternative to border measures can be environment-friendly technology transfer.

 

India, along with UNFCCC and the Carbon Trust, has already proposed an international network of Climate Innovation Centres (CIC), deemed to build capacities of developing countries to address challenges related to transfer, development and deployment of environmentfriendly technologies both for domestic use as well as for export . Also, China and other developing countries have spoken in favour of making technology transfer more affordable .

On IPRs in technology transfer, issues like compulsory licensing and parallel imports have continued to remain contentious. Another issue creating a divide between the north and south is carbon labelling. The latter is a process that measures the amount of emission generated by production of commodities or services and conveys this information to consumers and to those making sourcing decisions in organisations.

So, if such schemes are designed succinctly and objectively, it may create incentives for production at various levels of the value/supply chains and help reduce emission. Conceptually, it sounds like a good approach, but the high cost of compliance may not be affordable for producers in developing countries. Such expensive adaptions – which require continuous monitoring and analysis of production processes – may deter the currently increasing participation of least developed countries in international trade.

It is, therefore, imperative that Brics reaches a common position on this issue. Besides, issues like the use of biofuels and the impact of climate change on agricultural trade are critical to developing countries. Right from the abstractness of classification of biofuels as agricultural , industrial or environmental goods, to the issue of subsidies to promote their production or consumption, the dilemma still remains. A possible common position of Brics on such cross-cutting issues will not only strengthen the southern voice, but will also provide a direction to the evolving multilateral trading system.

(The author is associate director at CUTS International)

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