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From Collision to Vision

Climate Change and World Trade, a Discussion Paper

World Economic Forum | November 2010

Scientists tell us that 2010 is likely to tie 1998 as the hottest year on record. The ice is melting. The seas are rising. The weather is behaving everywhere in new and ominous ways.

Climate change continues, and worldwide efforts to confront climate change continue as well. One among many urgent questions raised by these continuing efforts is how best to avoid a collision between advancing trade and combating climate change. Such a clash seems increasingly likely, given the gridlock in global talks and the growing fears that competition will suffer if sweeping regulatory reforms are implemented during these hard economic times.

There is no way of avoiding linkage between trade and climate change. Economically, environmentally and, not least, politically these two significant areas of global concern are linked inextricably. Given this link, the world must somehow find a way to continue to lower barriers to trade while also combating climate change. The alternative is what some foresee as a “train wreck”—a rapidly approaching collision between the international rules that govern world trade and the national and international means being constructed and employed to confront climate change.

A collision between trade and climate change would be disastrous for both.

To help prevent such a collision, the Working Group on Trade and Climate Change was convened at the initiative and under the auspices of the World Economic Forum. Members of the working group come from all parts of the world. Members number those with experience and expertise in trade, climate change and all aspects of global governance.

Members are united by their common commitment to sustaining and strengthening the rule-based multilateral trading system of the World Trade Organization. They are united also by their shared conviction that climate change is real, and that it is the most urgent of all the many urgent issues facing humanity.

Together, members have spent much time in recent months examining at some length many of the complexities of this urgent question. Intentionally, members have not addressed the economic and environmental dimensions of the interrelationship between trade and climate change, which are thoroughly addressed elsewhere. Rather, they have focused instead on the legal and structural dimensions of the linkage between trade and climate change—because that is where they see a collision between trade and climate change as most likely to occur.

In this report, the working group offers a summary of its common conclusions for global consideration going forward. A report on this question could easily, and justifiably, be lengthy. They have chosen instead to make the report shorter rather than longer—in hope that it may be more widely read, and that it may be more useful to negotiators and other international decision-makers as they continue to address the global challenge of climate change.

In brief, the conclusions are:

  1. As with other aspects of climate change, the ideal solution for preventing a collision between trade and climate change is the early conclusion of an effective and comprehensive global climate change treaty.
  2. If there is no early conclusion of an effective and comprehensive global climate treaty on climate change, national efforts to confront climate change are likely to proliferate. These efforts must not include protectionist provisions, as resort to protectionism would lead to mutually destructive conflicts over trade.
  3. In the working group’s strong view, the members of the WTO should begin immediately to negotiate agreements to resolve the issues likely to arise from the enactment of national measures on climate change rather than leave those issues to eventual resolution in WTO dispute settlement.
  4. WTO rules should not be viewed solely as constraints on efforts to address climate change. WTO rules can and should be used affirmatively to help fight climate change.
  5. The WTO can be a model for how the world structures the international effort to address climate change, evolution of the GATT and the move towards the needed conclusion of global agreement on a comprehensive climate treaty.

Download: From Collision to Vision: Climate Change and World Trade (PDF, 2.38 M)

Read More: Development, Economy, Energy, Environment, Finance, Globalization, Sustainability, Trade, Global

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