A new
and dangerous form of trade and technology protectionism is fast
emerging in the name of climate change, and it is poisoning North-South
relations in the two negotiating arenas on climate change and on trade.
There
are clear signs that some developed countries, especially the United
States, are preparing to use unilateral trade measures, such as
imposing tariffs, taxes or charges on the products of developing
countries, on the grounds of combating climate change.
A
bill passed recently by the U.S. House of Representatives gives the U.S.
president authority to impose financial charges (or taxes) on some
imports coming from developing countries that in the U.S. view are not
taking enough action to curb their greenhouse gas emissions.
The
U.S. House of Representatives has also sought protectionism against
technology transfer through three bills it has adopted that prevent U.S.
negotiators in the UN climate change convention from agreeing to any
relaxation in the rules or enforcement of intellectual property. There
are signs that other developed countries, including in Europe, are also
preparing the grounds for climate-linked protectionism.
The
developing countries are starting to oppose these moves. Indian
political leaders protested to Hilary Clinton about the threat of U.S.
carbon tariffs during her visit. China's Commerce Ministry has also
criticized the protection element in the U.S. climate bill.
Most
importantly, the developing countries have taken up the issue at the
climate talks leading up to Copenhagen. On August 13, the G77 and China
made a statement at the Bonn climate talks, warning developed countries
not to adopt unilateral trade-restrictive measures, as these would
contravene the Climate Change Convention's provisions.
India
also proposed text for the Copenhagen outcome, that developed countries
"shall not resort to any form of unilateral measures including
countervailing border measures, against goods and services imported
from developing countries on grounds of protection and stabilization of
climate."
The
text listed many provisions of the Convention that would be violated if
such measures are taken. This was supported by many countries,
including China, Argentina, Brazil, Singapore, South Africa, Saudi
Arabia, and by the G77 and China's statement.
In
Geneva, many developing country diplomats are increasingly concerned
about the likelihood of the United States and other developed countries making use
of either tariffs or financial charges on imports of developing
countries. Imposing
extra tariffs or financial charges on imports on the basis of how the
products are produced ("process and production methods" or PPMs in
technical jargon) is very controversial. It has been rejected by
developing countries at the WTO since 1996 as a form of protectionism,
which they say will unfairly curb developing countries' exports. They
also argue that it is against the rules of the WTO.
Many
developed countries however have wanted to make use of trade measures
on environmental grounds. They are preparing the case that trade
measures linked to PPMs are legitimate, or else climate-linked trade
measures are allowed under the GATT's general exception for the
environment.
Developing countries claim that linking trade measures to climate and the environment are unjust because they have lower technological capacity and thus cannot match the developed countries. Developing countries should instead be assisted through technology transfer, but the IPR regime (especially the TRIPS agreement) is an obstacle, and now the U.S. Congress is proclaiming that the U.S. administration cannot allow relaxation of the IP rules.
If climate protection is allowed, it will also open the floodgates to all kinds of protection by blocking developing country products on the basis of how they are made.
This "mother of new trade protection" is coming at a time of economic recession when world leaders have piously proclaimed they will not resort to trade protection. The climate-trade issue is thus explosive, and is opening a Pandora's box which threatens to contaminate the negotiations in the UNFCCC as well as the WTO.
Before the situation deteriorates, developed countries should re-consider their moves on this issue, restrain the climate-protection forces in their society, and commit instead to a "fair game."
Martin Khor is Executive Director of the South Centre. He can be contacted at: director@southcentre.org. For further reading on Climate Protectionism, check out this special edition of the South Centre bulletin.
