Climate Change and Trade Policies

There has been much debate over the last two decades on the role international trade plays in climate change, one of the most crucial problems on earth. Climate change is a global challenge requiring international collaborative action. Another area in which countries have successfully committed to a long-term multilateral resolution is the liberalization of international trade.

The Kyoto Protocol remains the key international mechanism under which the industrial countries have committed to reduce their emissions of carbon dioxide and other greenhouse gases. The objectives of Kyoto also provide an opportunity for aligning development and energy policies in such a way that they could stimulate production, trade, and investment in cleaner technology options. Since global emission goals and global trade are policy objectives shared by most countries and nearly all of the World Bank’s clients, it makes sense to consider the two sets of objectives together. Following limited participation in the Kyoto Protocol and the lack of agreement in Copenhagen in 2009, the EU has been building a broad coalition of developed and developing countries in favour of high ambition that shaped the successful outcome of the Paris conference.

The Paris Agreement is an agreement within the United Nations Framework Convention on Climate Change (UNFCCC) dealing with greenhouse gases emissions mitigation, adaptation and finance starting in the year 2020. The language of the agreement was negotiated by representatives of 195 countries at the 21st Conference of the Parties of the UNFCCC in Paris and adopted by consensus on 12 December 2015. The Paris Agreement builds upon the Convention and – for the first time – brings all nations into a common cause to undertake take ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort. The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

The changes that led to the Paris accord came about through a mix of factors, particularly major shifts in the domestic politics and bilateral relationships of China and the United States, the world’s two largest greenhouse gas polluters. Countries will be required to reconvene every five years, starting in 2020, with updated plans that would tighten their emissions cuts. They will be legally required to monitor and report on their emissions levels and reductions, using a universal accounting system.

“The Paris Agreement is meant to get everyone on board in one structure where you can address climate change together,” said Dirk Forrister, the president and chief executive of the International Emissions Trading Organization, a nonprofit organization that consults with governments and companies. “But if one big country backs out it could trigger a whole wave of trade responses.”

During the a href=”” target=”_blank”>United Nations Climate Change Conference (COP 22) in Morocco, countries pledged to move forward on the implementation of the Paris Agreement. Conforence in Morocco technically included the first Meeting of the Parties to the Paris Agreement, because the agreement entered into force in early November, years earlier than expected.

President-elect Donald Trump’s position on the Paris Agreement is softening. Earlier this year during his campaign Trump said he would pull the United States out of the U.N. global climate accord, approve the Keystone XL oil pipeline from Canada and rescind measures by President Barack Obama to cut U.S. emissions and protect waterways from industrial pollution. In a meeting with New York Times journalists at the newspaper’s Manhattan headquarters, columnist Tom Friedman asked about Trump’s position on withdrawing from the climate pact, according to Times reporter Mike Grynbaum, who was in the room. “I’m looking at it very closely,” Grynbaum reported Trump as saying. “I have an open mind to it.” In the meantime China, the world’s biggest emitter of greenhouse gases, has made it clear they intend to move forward with the agreement.

The relationship between climate change and trade policies should change to a more positive one, in which climate change policies with economic and trade aspects and trade policies with environmental and climate change aspects are considere.