Trade Measures and Climate Change

The paper examines the use of trade measures in U.S. and EU climate policies, identifying objectives such as preventing carbon leakage and incentivizing global action. It argues that while protecting domestic industry is not a legitimate use of such measures under WTO and UNFCCC principles, properly designed measures to prevent emissions leakage may be permissible. The author highlights the American Clean Energy and Security Act (ACESA) as a proposal that could allow the U.S. to unilaterally determine the equity of other countries' emissions commitments, potentially conflicting with the UNFCCC principle of common but differentiated responsibilities. Given the high risk of WTO disputes, the paper recommends that the UNFCCC COP establish principles and procedures to limit the use of trade measures.

• Trade measures in U.S. and EU draft climate legislation are driven by four primary objectives: protecting domestic industry from competitive disadvantages due to unequal carbon prices, providing transition assistance to energy-intensive and trade-exposed industries, preventing 'leakage' where production moves to countries with laxer emissions limits, and incentivizing other nations to join climate agreements to prevent 'free-riding'.
• The use of trade measures specifically to protect domestic industry from competition is not authorized by the World Trade Organization (WTO) or the United Nations Framework Convention on Climate Change (UNFCCC), as both discourage unilateral trade measures that are arbitrary or disguised restrictions on trade.
• The American Clean Energy and Security Act (ACESA), passed by the U.S. House of Representatives in June 2009, could allow the U.S. to impose trade measures on parties to a post-2012 international climate agreement if the U.S. determines their commitments are not "at least as stringent as" its own, regardless of whether those parties are in full compliance.
• The implementation of climate-related trade measures carries a high risk of WTO disputes, which could force a choice between dismantling central climate legislation or redefining UNFCCC standards for fair climate policy.
• Because a total prohibition on trade measures is unlikely to be accepted by the U.S. or EU, and explicit authorization is unlikely to be accepted by China or India, the UNFCCC COP should create principles and procedures to limit their use and resolve disputes.

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} }