Trade and climate: joined at the hip?

Bridges Monthly, ICTSD, 1 de febrero 2010

The overarching theme of the seventh WTO ministerial conference was ‘no surprises’. It was agreed months in advance that there would be no negotiations, that ministers would make brief statements at a plenary and review the gamut of the WTO’s activities, as well as its contribution to recovery, growth and development. Only items on which the entire membership had agreed in advance would be on the agenda, and the discussions would be reflected in a ‘balanced and factual’ chair’s summary. The promise of no surprises was kept to the letter.

What Happened…

Well-known positions and priorities got a re-airing as minister upon minister made three-minute statements in an often empty plenary hall. Parallel sessions provided some latitude for an exchange of views, but no ministerial guidance emerged on the issues debated. True to the script, Chile’s Trade Minister Andrés Velasco, who chaired the conference, summed up the discussions in very general terms and less than a thousand words (see page 4 for excerpts).

According to the summary, “ministers reaffirmed the need to conclude the round in 2010 and for a stock-taking exercise to take place in the first quarter of next year.” The stock-taking, scheduled for the last week of March, will focus on whether concluding the Doha Round in 2010 remains doable (see page 5 for further details).

Despite the non-event nature of the ministerial conference, WTO Director-General Pascal Lamy said the event had “sent a strong signal of convergence on the importance of trade and the Doha Round to economic recovery and poverty alleviation in developing countries.”

The convergence did not extend to the substance of the negotiations, however. US Trade Representative Ron Kirk never wavered from the key message that his country was looking for a substantial increase in market access, and needed to know what was on offer before engaging further. In order to conclude the round, “advanced developing economies must step up,” he said, adding that it was more important to get the right result than a quick one. This does not point to a revitalisation of negotiations in Geneva, where many have blamed the lack of US engagement as the main factor holding up the talks. Off the record, however, many delegates admit that other governments also have reservations about trade liberalisation that could affect jobs at a time of fragile recovery from the worst recession since World War II.

The only (pre-agreed) formal decisions of the ministerial meeting were an extension of a moratorium on so-called ‘non-violation’ disputes in the field of intellectual property rights, and the maintenance of the practice of not imposing customs duties on e-commerce. Both issues have been under consideration at the WTO for years, and the moratoria have been prolonged from one ministerial to the next.

…and What Did Not

Least-developed countries (LDCs) had proposed an ‘early harvest’ package of actions in their favour, including duty-and quota-free access to developed country markets, a waiver covering preferential treatment for their service providers, a solution to cotton subsidies and improving the accession process for LDCs (see page 6). However, this proposal was not on the formal agenda and thus none of the measures were adopted. The chair’s summary noted briefly that “LDC-specific issues were underlined as needing particular attention.”

Eighteen developed and developing countries had proposed that the outcome document include a request from ministers for the WTO’s General Council to “establish an appropriate deliberative process to review the organisation’s functioning, efficiency and transparency and consider possible improvements.” This proposal, aimed at strengthening the WTO as an institution, did not make it to the official agenda either, and ministers did not request a review. Instead, the chair reported ‘broad convergence’ on the need to improve notifications, data collection, analysis and dissemination. He also noted that enhancing the WTO’s effectiveness “should not compromise the principle of transparency and inclusiveness.”

These, and a host of other issues and challenges faced by the multilateral trading system, such as climate change, were subject of substantive debates at the Geneva Trade and Development Symposium, which ran parallel to the official conference (see page 23).

Climate Change Summit Dashes Hopes

If the WTO ministerial conference was a deliberate non-event, the Copenhagen climate summit held a week later was anything but. Eleventh-hour negotiations between heads of state, protesting activists and delegate walkouts captured the attention of the media, as well as the public.

Ambitions had been scaled down before the conference, and no one expected agreement on binding new commitments to reduce greenhouse gas emissions. Many, however, still hoped for progress toward that goal. Those hopes were dashed when the only outcome of the two-week gathering turned out to be a non-binding political statement with no quantified targets and no deadlines for achieving future cuts. The Copenhagen Accord was signed by 20 countries, and supported by many more, but not officially adopted (see page 17).

The Trade and Climate Nexus

How the world responds to climate change has significant implications for international trade. The Copenhagen Accord does not even mention two of the most contentious issues at stake here, i.e. border tax adjustments on carbon-intensive imports (strongly opposed by developing countries) and the role intellectual property rights in keeping climate-friendly technologies out of reach of poor nations (a no-go zone for many developed countries). Both were subject to fierce debate in the negotiations throughout last year, and remain unresolved.

Some, including WTO Director-General Lamy, view the Copenhagen Accord as a step forward since, unlike the Kyoto Protocol, it could eventually encompass the majority of world emissions. The ever-optimistic WTO chief noted that although the memberships of both the WTO and the UN were divided on the use of border adjustment measures, “the more we move toward a multilateral framework on climate change, the more unilateral trade measures will be difficult to explain.” But what if a multilateral framework cannot be agreed? Will the WTO be called to arbitrate whether unilateral trade measures imposed in the name of fighting climate change are consistent will international trade rules? Pitting the trade and climate regimes against each other would be the worst possible outcome for sustainable development.

Next Stop Mexico

The Executive Secretary of the Climate Change Convention admitted that the Copenhagen Accord was short on ambition, but also said it was a ‘letter of intent’ that was “not precise about what needs to be done in legal terms. So the challenge is now to turn what we have agreed politically in Copenhagen into something real, measurable and verifiable.”

Negotiations will continue, but momentum has undoubtedly been lost. Many fear that the Copenhagen Accord’s lack of a commitment to reaching a binding treaty at the next conference of the parties - to be held in Mexico City late in 2010 - will make postponing action easier. Just one negotiating session is scheduled before Mexico, during the first two weeks of June in Bonn.