What Has Climate to Fear from Trade?

The document outlines the 'fears and suspicions' of the climate community regarding how WTO rules and trade assumptions may obstruct progress on climate change. It argues that the trade regime's focus on economic growth and the avoidance of trade restrictions creates a 'chilling effect' on climate action, as countries fear carbon leakage and loss of competitiveness. The author explores three potential trade-related strategies for climate action: 'levelling up' through border adjustment measures or coordination, favoring environmental goods and services, and using trade sanctions. The paper concludes that while specific reforms to GATT Article XX and the most-favored-nation principle are ideally needed, indirect approaches via jurisprudence or guidelines are more politically realistic.

• The global trade regime is perceived as a constraint on climate action because its core principles prioritize economic development and the avoidance of trade restrictions over environmental goals, which may require deferring economic growth.
• Trade is viewed as a primary source of 'carbon and political leakage,' where aggressive domestic mitigation policies lead to emissions moving to jurisdictions with weaker rules, thereby undermining national and international climate plans.
• The climate community identifies three main trade-related approaches to improve climate outcomes: countering free-riding to stop carbon leakage, favoring environmentally friendly goods and services, and using trade sanctions against non-compliant countries.
• Border adjustment measures (BAMs) are discussed as a way to level the playing field by adding or reducing costs at the border, but they are considered potentially dangerous under WTO rules, particularly regarding taxes on energy content.
• The use of trade sanctions for climate is compared to the success of the Montreal Protocol on ozone-depleting substances, though the author notes the UNFCCC lacks a similar agreed trade component.
• The author proposes five specific areas for debate to reform the trade system, including removing ambiguities in GATT Article XX, redefining 'like products' to account for carbon footprints, and authorizing low-carbon subsidies.

APA

Derwent, H. (2015). What Has Climate to Fear from Trade? Climate Strategies. https://climatestrategies.org/wp-content/uploads/2020/06/What-Has-Climate-to-Fear-from-Trade.pdf

Chicago

Derwent, Henry. What Has Climate to Fear from Trade? Climate Strategies, 2015. https://climatestrategies.org/wp-content/uploads/2020/06/What-Has-Climate-to-Fear-from-Trade.pdf.

Wikipedia

{{cite report |last1=Derwent |first1=Henry |title=What Has Climate to Fear from Trade? |publisher=Climate Strategies |date=August 2015 |url=https://climatestrategies.org/wp-content/uploads/2020/06/What-Has-Climate-to-Fear-from-Trade.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{derwent2015what, author = {Derwent, Henry}, title = {{What Has Climate to Fear from Trade?}}, institution = {Climate Strategies}, year = {2015}, month = aug, url = {https://climatestrategies.org/wp-content/uploads/2020/06/What-Has-Climate-to-Fear-from-Trade.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }