Common Tragedies

Thoughts on Environmental Economics

Suggestions for climate and trade policy

Posted by Daniel Hall on December 11, 2008

A central issue in designing US climate change policy is how to level the playing field internationally. Given uncertainties in their effectiveness and possible conflicts with WTO rules, the flowering of national trade measures and their resolution by WTO panels may not offer the best approach. … Rather than consign the crucial decisions to the WTO judicial system, key WTO members should attempt to write a new WTO Code of Good Practice on GHG rules. The idea would be to define more sharply the policy space for climate control measures that are consistent with core WTO principles.

That is Gary Hufbauer writing at VoxEU.  (How did I miss this post earlier this year?)  Here is some little-regarded info about US imports:

The US imports carbon-intensive goods largely from Canada and the EU, which emit less CO2 than the US.  China and India, the primary targets of US trade measures, are not large suppliers of carbon-intensive exports to the US.

See the VoxEU post for a chart of the US import data.

You occasionally hear suggestions that perhaps all climate negotiations could get moved under the aegis of the WTO.  While I agree that the evolution of the GATT into the WTO is a nice success story in international relations, realistically climate negotiations are going to proceed under the UN Framework Convention on Climate Change, for reasons of path dependency if nothing else.  But given the links between climate policy, energy policy, energy prices, and international trade, I think the suggestion from Hufbauer about negotiating some good practices for climate and trade policy upfront is a very smart idea.

Here is a book (ungated version here) from the Peterson Institute (Hufbauer’s employer) on international competition and climate policy design.

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