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Climate-friendly Trade Sanctions?

Amanda Hawn

In statements several weeks ago, a European Parliamentarian raised the spectre of Europe using trade sanctions to get the US and Australia back to the climate negotiating table. Is Europe kicking it up a notch or just blowing off steam? The Ecosystem Marketplace takes a look.

In statements several weeks ago, a European Parliamentarian raised the spectre of Europe using trade sanctions to get the US and Australia back to the climate negotiating table. Is Europe kicking it up a notch or just blowing off steam? The Ecosystem Marketplace takes a look. Until now, Kyoto Protocol negotiators have generally employed the carrot when trying to lure the United States to embrace global carbon regulations. Market-based instruments such as Joint Implementation (JI) and the Clean Development Mechanism (CDM), for instance, both originated as concessions to the US. But faced with the US administration's intransigence and with the end of the Kyoto Protocol's first commitment period (2012) looming on the horizon, some Kyoto states appear ready to turn to the stick. Speaking on behalf of the European Parliament (EP) two weeks ago, Satu Hassi, Vice-President of the Parliament's environment committee, asked the European Commission to draft trade sanctions against non-Kyoto countries. "We call on the Commission to carefully consider the possibility of setting WTO-compliant border adjustment measures on trade against those countries that take a free ride at the expense of our planet." The U.S. acknowledges that it emits roughly a quarter of the global total greenhouse gases, but has shunned the notion of mandatory carbon cuts since 2001 when President Bush pulled the country out of Kyoto talks. In her comments, Hassi made it clear that the United States was at the top of the list of targets for the EP's proposed sanctions. The U.S. mission to the European Union, meanwhile, did not comment of the EP resolution.

Trade Sanctions

The idea of trade sanctions against non-Kyoto countries has been bandied about for years, but when Martin Rocholl, Director of Friends of the Earth in Europe, raised the idea at a conference entitled "Europe's Role in Global Environmental Governance" in early 2005, it met with more-focused interest than usual. Professor Thomas Cottier, Director of the World Trade Institute in Berne, agreed that trade measures could do more to promote sound environmental policies and pointed out that some such moves would find solid backing under current WTO law concerning privileging Process and Production Methods (PPMs). More specifically, Rocholl suggested border taxes on products coming from non-Kyoto countries. When asked if he thought all products should be taxed, he suggested "aluminum, steel and chemicals" as initial possibilities, but said that products should be considered on a "case-by-case basis." The resolution adopted by the European Parliament this month did not specify what form sanctions should take, but did state that they should be aimed at "offsetting any competitive advantage" of countries who do not have "carbon-constraints in their industrial production."

More Bark than Bite?

In truth, the Parliament's vote may have been more about cracking the whip, than actually using it. The final resolution was "non-binding" and the text stipulated that any sanctions would have to be in full compliance with WTO rules. Indeed, sources inside Parliament admitted that the resolution's wording had been watered down by an amendment from the European People's Party. And European Commission sources told the EU Observer that, "the legal ground for raising any trade sanctions for high-polluting states is weak." Instead, say those in the know, the commission is more likely to return to the carrot, offering preferential trade agreements to trade partners who do sign up for the Kyoto Protocol. But the move by the European Parliament, widely regarded as the voice of the people, nonetheless sends a clear signal: the gloves may come off in round two of Kyoto talks. "After the end of the first Kyoto commitment period, the world will need more drastic emissions cuts and more countries to take part in the emissions reduction challenge," said Hassi. "It is evident that the most advanced developing countries need to be on board. However, it will be very difficult to engage countries such as China and India to take measures to curb emissions if the biggest emitter and the richest nation in the world — the US — remains a 'free-rider'." Whether Hassi's name-calling just sounds like a tougher form of diplomacy, or actually represents one remains to be seen. At the very least, however, the plot twist suggests Kyoto's next chapter will be an interesting one. Amanda Hawn is the Assistant Editor of the Ecosystem Marketplace. She can be reached at athawn@alumni.princeton.edu. First posted: May 23, 2005

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