5.1.1

Harmonisation of Climate and Trade Policies under Regional and Multilateral Agreements

Trade instruments can facilitate the transition to a low carbon economy enabling achievement of emissions reductions in the most efficient way. However, the challenge is how to make the use of climate policy-related trade measures consistent with countries’ obligations under the WTO Agreement and the UNFCCC.

The project examines, on the one hand, potential conflicts between trade-related climate policy measures and WTO law and, on the other hand, premises and conditions for the effective co-existence between the climate change and trade regimes at three levels of governance – national, regional and multilateral.

 

An important part of the research focuses on climate policy initiatives undertaken under preferential trade agreements. The trend to enter into PTAs seems irreversible. It is therefore important to explore the possibilities of making the process of economic and trade regionalisation climate-friendly through the inclusion of climate policy-related provisions in PTAs. We therefore explore the possible content of climate policy-related provisions in PTAs in light of their regulatory effectiveness and compatibility with WTO rules. We examine the effects of bilateral and regional climate policies on multilateral negotiations in the UNFCCC and WTO and prospects for multilateralisation of climate-related policies initially enacted unilaterally or negotiated at a bilateral or regional level.

 

In addition to legal analysis, we employ partial equilibrium economic analysis to examine and compare the effects of unilateral, preferential and multilateral liberalisation of environmental goods and services and other trade-related climate policy measures to the extent that these are compatible with climate policy objectives.