Towards a Low-Carbon Economy
Chapter 6: The US Proposed Carbon Tariffs, WTO Scrutiny and China’s Responses
1 INTRODUCTION 1. There is a growing consensus that climate change has the potential to seriously damage our natural environment and affect the global economy, thus representing the world’s most pressing long-term threat to future prosperity and security. With greenhouse gas emissions embodied in virtually all products produced and traded in every conceivable economic sector, effectively addressing climate change will require a fundamental transformation of our economy and the ways that energy is produced and used. This will certainly have a bearing on world trade as it will affect the cost of production of traded products and therefore their competitive positions in the world market. This climate-trade nexus has become the focus of an academic debate (for example, Bhagwati and Mavroidis, 2007; Charnovitz, 2003; Ismer and Neuhoff, 2007; Swedish National Board of Trade, 2004; World Bank, 2007b; Zhang, 1998, 2004b, 2007f; Zhang and Assunção, 2004), and gains increasing attention as governments are taking great efforts to implement the Kyoto Protocol and forge a post-2012 climate change regime to succeed it. The IPCC (2007) calls for developed countries to cut their greenhouse gas emissions by 25–40 percent by 2020 and by 80 percent by 2050 relative to their 1990 levels, in order to avoid dangerous climate change impacts. In the meantime, under the United Nations Framework Convention on Climate Change (UNFCCC) principle of ‘common but differentiated responsibilities’, developing countries are allowed to move at different speeds relative to their developed counterparts. This principle is clearly reflected in the Bali...
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