Trade Measures and Climate Change

This research paper analyzes proposed trade measures within U.S. and EU domestic climate policies, examining their objectives, legality under international agreements, and potential to trigger disputes within the World Trade Organization (WTO).

• Proposed trade measures in the U.S. and EU are driven by four primary policy objectives: protecting domestic industry from competitive disadvantages caused by unequal carbon prices ("competitiveness"), providing "transition assistance" to energy-intensive, trade-exposed industries, preventing "leakage" where production moves to countries with less stringent emissions limits, and discouraging "free-riding" by incentivizing other nations to adopt climate policies.
• While the World Trade Organization (WTO) and the United Nations Framework Convention on Climate Change (UNFCCC) discourage unilateral trade measures that are arbitrary or disguised restrictions on trade, properly designed and equitably applied measures to prevent emissions leakage may not be prohibited under these frameworks. However, neither agreement authorizes trade measures specifically to protect domestic industry from competition.
• The American Clean Energy and Security Act (ACESA), passed by the U.S. House of Representatives in June 2009, would allow the U.S. government to use trade measures against a party to a post-2012 international climate agreement if the U.S. determines that party's commitments are not "at least as stringent as" its own, even if that party is in full compliance with the agreement.
• There is a high risk of WTO disputes over climate-related trade measures. To mitigate this, the author suggests that the UNFCCC Conference of the Parties (COP) should establish principles and procedures to limit such measures, as it is unlikely that the U.S. and EU would accept an outright prohibition, nor that China or India would agree to rules explicitly authorizing them.

APA

World Resources Institute (n.d.). Trade Measures and Climate Change. https://www.wri.org/research/trade-measures-and-climate-change

Chicago

World Resources Institute. Trade Measures and Climate Change. n.d. https://www.wri.org/research/trade-measures-and-climate-change.

Wikipedia

{{cite report |author=World Resources Institute |title=Trade Measures and Climate Change |url=https://www.wri.org/research/trade-measures-and-climate-change |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendtrade, author = {{World Resources Institute}}, title = {{Trade Measures and Climate Change}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/trade-measures-and-climate-change}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }