ICC recommendations on trade and climate change
Multilateral trade liberalization and the rules-based multilateral trading system have played a crucial role in the past 60 years in raising world living standards, creating employment, and widening consumer choice. They have also been indispensable in helping keep in check the ever-present forces of protectionism.
To maintain progress achieved, governments should focus on ways to secure the mutually reinforcing benefits of a strengthened rules-based multilateral trading system and a new long-term and effective global framework for combating climate change that includes all major emitters. They should not allow themselves to be side-tracked in this momentous task by border measures that would undermine intergovernmental cooperation and damage international trade.
Proposals based on unilateral trade measures attempt to address pressing and challenging political and economic pressures. They seek to create a “level playing field” for domestic industries subject to climate change policies, by targeting competitors of these industries in other countries not subject to such policies, and seeking to compel them to bear part of the cost of such policies. These proposals are motivated by a desire, to offset what is seen as the competitive advantage enjoyed by industries in countries that are not subject to the same level of domestic climate change policies, whether arising from international, regional or domestic climate policies. Policy makers also express concern about the relocation of energy intensive industries – a phenomenon often referred to as carbon leakage — and thus suggest that such measures are needed to preserve the environmental integrity of domestic/regional schemes. ICC believes that these challenges can be addressed in other ways that work within a trade-climate change synergy.
ICC recommends that all governments:
- reject and avoid unilateral trade measures as a policy option to deal with climate change;
- ensure alignment and mutual compatibility between climate change and trade policies by developing climate change policies that promote sustainable development, while safeguarding an open and non-discriminatory multilateral trading system and guaranteeing the integrity of WTO disciplines;
- eliminate trade barriers to environmental goods and services;
- ensure strong protection of intellectual property rights to facilitate diffusion of clean technologies and provide an incentive for innovation; and
- work cooperatively, including with business and civil society, to reach agreement on an effective post-2012 global framework that includes all major emitters to meet the challenge of climate change under the UNFCCC process , and that functions harmoniously with WTO rules and the multilateral trading system.