Climate change

ICC panel explores trade-climate change links

  • 12 June 2008

The most important multilateral negotiations with wide-ranging impact on the world economy are going on simultaneously: to agree on a global framework to address climate change, and the Doha Round of multilateral trade talks. To explore the links between these interrelated issues, trade and climate change, ICC hosted a side event at the UN Framework Convention on Climate Change (UNFCCC) last week in Bonn.

In addition to examining the interrelationship between negotiations at the World Trade Organization (WTO) and those for a post-2012 climate change agreement, an ICC panel of four experts explored opportunities for aligning trade and energy policies to produce more clean energy by stimulating trade and investment.

The discussion, Chaired by Laurent Corbier, also Chair of ICC’s Environment and Energy Commission,  was well-attended by business, government, international organizations and civil society. Debate was geared towards identifying the impact of the Doha Round and the UNFCCC negotiations on business confidence, and in turn the outlook for business to undertake long-term investments, given the backdrop of an uncertain and gloomy outlook for the world economy.

Dr. Reinhard Quick, a member of ICC’s Trade and Investment Commission and a Vice-Chair of the WTO working group of BUSINESSEUROPE, said the WTO was a potential arena to address some climate change issues. But Dr. Quick warned against ‘creeping protectionism’ in the guise of unilateral trade measures to address climate change.

Julia Reinaud, a climate change analyst from the International Energy Agency (IEA), outlined the IEA’s work analyzing the short- and long-term impact of carbon leakage on competitiveness. Carbon leakage happens when carbon emissions rise in one country as a result of stricter climate change policies in another country. Ms. Reinaud also raised other as-yet unanswered questions, including how to track carbon leakage across national borders. She underlined that an international climate change agreement is the best option, preferable to national or regional measures to address carbon leakage.

WTO Counsellor Ludivine Tamiotti said carbon leakages could pose challenges for international trade, but signaled the benefits from a successful outcome to the Doha Round could stimulate investment and diffusion of clean technology.

After detailing the current state of WTO negotiations on environmental goods and services, Mahesh Sugathan, Trade Policy Coordinator from NGO the International Centre for Trade and Sustainable Development, said many issues have yet to be discussed, especially the treatment of dual-use technologies, and definition of environmental goods.

ICC, which has long-standing experience of advocacy on international trade and is the business focal point for UNFCCC negotiations, will continue to explore and inform discussions in various forums.