Making the International Trading System Work for Climate Change

The international trade system, including the World Trade Organization (WTO) as well as regional and bilateral trade agreements, has often been criticised from a climate policy perspective. Trade rules are often perceived by some as a barrier to stronger climate ambition.

Looming conflicts between the climate regime and the trade system have been the focus for many analysts and policy-makers. With the bottom-up system now emerging under the Paris Agreement, each country is determining its own national contribution to global climate protection. This could lead to uneven implementation and potential trade related issues.

One of the most controversial issues is the idea that some countries could try to safeguard strong national climate policies by adjusting carbon prices at the border to protect competitiveness of their industries. However, some fear this may become a form of disguised protectionism. Yet, as well as an obstacle, trade rules can also be viewed as something that could potentially help to achieve a transformation in climate policy. Examples of this include challenging environmentally and economically damaging fossil fuel subsidies, or by liberalising trade in environmental goods and services.

The research is being conducted by Harro van Asselt (UEF and Stockholm Environment Institute), Kasturi Das (Institute of Management Technology, Delhi, India), Susanne Droege (Stiftung Wissenschaft und Politik, Berlin, Germany) and Michael Mehling (MIT, Cambridge, MA, United States). The project is managed by Climate Strategies and funded by the KR Foundation.