Competitiveness, Leakage and Comparability

The paper examines how the U.S. and EU are considering trade measures to address industrial competitiveness, carbon leakage, and free-riding in their post-2012 greenhouse gas emissions legislation. It highlights a potential conflict between these unilateral measures and the principles of the WTO and UNFCCC, noting that U.S. proposals could penalize developing countries even if they comply with international agreements. The author argues that the UNFCCC Conference of the Parties should establish guiding principles for trade measures to prevent legal disputes and protect the UNFCCC's legitimacy as a global standard-setter.

• Draft climate legislation in the U.S. and EU includes or considers trade measures to achieve three primary goals: protecting domestic industry from competition, preventing the relocation of polluting industries to other countries (leakage), and penalizing nations that do not join future climate agreements (free-riding).
• There is a significant risk of conflict between domestic trade measures and international frameworks; neither the WTO nor the UNFCCC authorizes trade measures for domestic industry protection, and both discourage unilateral measures that are arbitrary or disguised trade restrictions.
• Current U.S. proposals could lead to trade disputes because a developing country could be subject to trade measures if the U.S. deems its policies not "comparable," even if that country is in full compliance with a post-2012 international climate agreement.

APA

World Resources Institute (n.d.). Competitiveness, Leakage and Comparability. https://www.wri.org/research/competitiveness-leakage-and-comparability

Chicago

World Resources Institute. Competitiveness, Leakage and Comparability. n.d. https://www.wri.org/research/competitiveness-leakage-and-comparability.

Wikipedia

{{cite report |author=World Resources Institute |title=Competitiveness, Leakage and Comparability |url=https://www.wri.org/research/competitiveness-leakage-and-comparability |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendcompetitiveness, author = {{World Resources Institute}}, title = {{Competitiveness, Leakage and Comparability}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/competitiveness-leakage-and-comparability}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }