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 US House of Representatives gives the US
president authority to impose financial charges (or taxes) on some imports
coming from developing countries that in the US
view are not taking enough action to curb their greenhouse gas emissions.
The US House of Representatives has also sought protectionism against
technology transfer through three bills it has adopted that prevent US
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 US Secretary of State Hillary Clinton about the threat of
US carbon tariffs during her recent visit. China's Commerce Ministry has also
criticized the protection element in the US climate bill.
Most importantly, the developing countries have taken up the issue at the
climate talks leading up to Copenhagen. On August 13, the Group of 77 countries
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 outcome of the upcoming Copenhagen climate
meeting 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 G-77 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 World Trade Organization
(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 general exception for the environment under the General Agreement on
Tariffs and Trade (GATT).
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 intellectual property rights
regime (especially the TRIPS intellectual property rights agreement of the WTO)
is an obstacle, and now the US Congress is proclaiming that the US
administration cannot allow relaxation of the intellectual property 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 that threatens to contaminate the negotiations in the United
Nations Framework Convention on Climate Change 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.
(Published with permission of the Global Policy Innovations program at the
Carnegie Council for Ethics in International Affairs.
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