Ed Joost Pauwelyn, Centre for Economic Policy
Research, 236 pages, £10 or download free from:
http://www.cepr.org/pubs/books/CEPR/booklist.asp?cvno=P209
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| Climate-change policies, arguably the most pressing
issue calling for global coordination, hitherto have somewhat
surprisingly been peripheral to the agenda of Geneva-based institutions
such as the World Trade Organisation. Energy supply traditionally has
been the preserve either of national jurisdiction or of international
cartels (OPEC), and international trade agreements consequently have not
addressed climate-change policies, the “world’s biggest market failure”
(to quote Lord Stern). This book gathers proceedings of a conference
held in 2008 in Geneva, home and host to many organisations and research
institutes focussed on multilateral trade issues. This volume contains
twenty presentations by experts drawn from multilateral institutions
(including OPEC), industry, law firms and industry associations on
future challenges to desegregate energy, trade and climate-change
policies. |
| In the long run, national energy supply management
will require compatibility with the agenda of international
climate-change policies. Since trade in fossil fuels comprises some 15%
of cross-border trade, this evolution would imply a substantive
expansion of the remit of the WTO. The WTO would bring considerable
expertise to these tasks, since energy policies have long relied on
government subsidies and thus implicitly discriminate between energy
sources. Subsidies underpin the market structure of national energy
policies. For example, the US in 1999 channelled over $6 billion to its
domestic fossil energy sector. In the meantime, subsidies and tariffs
for green energy have proliferated, with differential tariffs for fuels
such as biodiesel and ethanol further distorting market-led investment
flows. The Global Subsidies Initiative of the International Institute
for Sustainable Development will add grist to the mill of those making
the case for placing climate-change policies on the agenda of trade
agreements. |
| Integrating climate-change and trade policies would
be a fertile field for the methodology of law and economics. A consensus
has yet to emerge where to draw the demarcation lines for prospective
trade policies. Assuming, for the sake of argument, a Ricardian
international trade regime would impose differential trade tariffs
according to an individual country’s comparative advantage in generating
energy, then fair rules would need to assess the particulars of each
country’s energy production mix. A pertinent legal precedent might be
the ‘shrimp turtle case,’ where US NGOs sued for the imposition of
punitive tariffs on Asian shrimp imports, which proceeded from the
allegation of unfair trade practice because Asian fishing fleets ignored
collateral damage on the turtle population in Asian waters. By this
logic, punitive tariffs are legitimatised where there is a production
process that is not truly cost-reflective. By analogy, the same legal
rationale could be applied to energy-intensive goods. Aluminium, for
example, requires so much energy in its production it is effectively
‘canned energy.’ Further legal challenges lie ahead for expanding the
rules for international trade in carbon emission rights, where “it is
unclear whether emission rights are commodities, currency-like units, or
something else, such as securities,” (Heng Wang, p 171). |
| This volume of conference proceedings merits the
attention of readers with an interest in the overlap between energy and
climate-change policies, and in policies for energy subsidies, pricing,
and fiscal incentives for renewables. |
Benedikt Koehler
Department of Energy and Climate Change
The author writes in a personal capacity |
|