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Climate change and trade policy : from mutual destruction to mutual support

Author

Listed:
  • Messerlin, Patrick A.
Abstract
Contrary to what is still often believed, the climate and trade communities have a lot in common: a common problem (a global"public good"), common foes (vested interests using protection for slowing down climate change policies), and common friends (firms delivering goods, services, and equipment that are both cleaner and cheaper). They have thus many reasons to buttress each other. The climate community would enormously benefit from adopting the principle of"national treatment,"which would legitimize and discipline the use of carbon border tax adjustment and the principle of"most-favored nation,"which would ban carbon tariffs. The main effect of this would be to fuel a dual world economy of clean countries trading between themselves and dirty countries trading between themselves at a great cost for climate change. And the trade community would enormously benefit from a climate community capable of designing instruments that would support the adjustment efforts to be made by carbon-intensive firms much better than instruments such as antidumping or safeguards, which have proved to be ineffective and perverse. That said, implementing these principles will be difficult. The paper focuses on two key problems. First, the way carbon border taxes are defined has a huge impact on the joint outcome from climate change, trade, and development perspectives. Second, the multilateral climate change regime could easily become too complex to be manageable. Focusing on carbon-intensive sectors and building"clusters"of production processes considered as having"like carbon-intensity"are the two main ways for keeping the regime manageable.Developing them in a multilateral framework would make them more transparent and unbiased.

Suggested Citation

  • Messerlin, Patrick A., 2010. "Climate change and trade policy : from mutual destruction to mutual support," Policy Research Working Paper Series 5378, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5378
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    References listed on IDEAS

    as
    1. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications - Books, The World Bank Group, number 6889.
    2. World Bank, 2005. "Global Economic Prospects 2005 : Trade, Regionalism and Development," World Bank Publications - Books, The World Bank Group, number 14783.
    3. Michael O. Moore, 2011. "Implementing Carbon Tariffs: A Fool’s Errand?," The World Economy, Wiley Blackwell, vol. 34(10), pages 1679-1702, October.
    4. Daniel Esty, 1994. "Greening the GATT: Trade, Environment, and the Future," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 40, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Nicole A. MATHYS & Jaime DE MELO, 2012. "Reconciling Trade and Climate Policies," Working Papers P37, FERDI.
    2. Nicole A. MATHYS & Jaime DE MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
    3. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Trade and Investment Flows Lead to Higher CO2 Emissions? Some Panel Estimation Results," Working Papers 1321, Indian Institute of Foreign Trade.
    4. Jaime de Melo, 2015. "Trade in a ‘Green Growth’ Development Strategy: Issues and Challenges," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 22, pages 553-580, World Scientific Publishing Co. Pte. Ltd..
    5. Henrik Horn & Petros C. Mavroidis, 2011. "To B(TA) or Not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective," The World Economy, Wiley Blackwell, vol. 34(11), pages 1911-1937, November.
    6. Ian Sheldon & Steve McCorriston, 2012. "Climate policy and border tax adjustments: Might industrial organization matter?," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 9(2), pages 7-28, Julio-Dic.
    7. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h2qa1ccc1 is not listed on IDEAS
    8. Alexandre Le Vernoy & Patrick Messerlin, 2010. "Water and the WTO: Don’t kill the messenger," Post-Print hal-03461720, HAL.
    9. repec:spo:wpmain:info:hdl:2441/5l6uh8ogmqildh09h2qa1ccc1 is not listed on IDEAS
    10. Ahmed, Khalid, 2017. "Revisiting the role of financial development for energy-growth-trade nexus in BRICS economies," Energy, Elsevier, vol. 128(C), pages 487-495.
    11. repec:hal:spmain:info:hdl:2441/5l6uh8ogmqildh09h2qa1ccc1 is not listed on IDEAS
    12. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    13. Mona Haddad & Ben Shepherd, 2011. "Managing Openness : Trade and Outward-oriented Growth After the Crisis," World Bank Publications - Books, The World Bank Group, number 2283.
    14. Narayanan G., Badri & Walmsley, Terrie L., 2011. "The Role of Labor Standards in International Trade: A CGE Approach," Conference papers 332097, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Alessandro Antimiani & Valeria Costantini & Chiara Martini & Luca Salvatici, 2011. "Cooperative and non-cooperative solutions to carbon leakage," Departmental Working Papers of Economics - University 'Roma Tre' 0136, Department of Economics - University Roma Tre.
    16. Jaime de Melo & Nicole A. Mathys, 2012. "Concilier les politiques commerciales et les politiques climatiques," Revue d’économie du développement, De Boeck Université, vol. 20(2), pages 57-81.
    17. Alexandre Le Vernoy & Patrick Messerlin, 2010. "Water and the WTO: Don’t kill the messenger," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
    18. Patrick Messerlin, 2010. "Making climate change and trade mutually supportive," ARTNeT Policy Briefs 26, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    19. Nicole A. MATHYS & Jaime DE MELO, 2011. "The Political Economy of Climate Change Policies: Political Economy Aspects of Climate Change Mitigation Efforts," Working Papers P24, FERDI.
    20. Michael O. Moore, 2011. "Implementing Carbon Tariffs: A Fool’s Errand?," The World Economy, Wiley Blackwell, vol. 34(10), pages 1679-1702, October.
    21. Antimiani, Alessandro & Costantini, Valeria & Martini, Chiara & Salvatici, Luca & Tommasino, Maria Cristina, 2013. "Assessing alternative solutions to carbon leakage," Energy Economics, Elsevier, vol. 36(C), pages 299-311.
    22. Stine Aakre, 2016. "The political feasibility of potent enforcement in a post-Kyoto climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(1), pages 145-159, February.
    23. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    24. repec:hal:wpspec:info:hdl:2441/5l6uh8ogmqildh09h2qa1ccc1 is not listed on IDEAS

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    Keywords

    Climate Change Mitigation and Green House Gases; Climate Change Economics; Emerging Markets; Carbon Policy and Trading; Debt Markets;
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