Reconciling Trade and Climate
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Reconciling Trade and Climate

How the WTO Can Help Address Climate Change

Tracey Epps and Andrew Green

This timely book addresses the interaction between policies addressing climate change and the rules of the WTO. The authors expertly examine the law and economics behind the application of trade rules in the area of climate, including the implications of WTO rules for domestic climate measures, the unilateral use of trade measures to attempt to force other countries to take climate action, and the role of trade measures in multilateral climate agreements. The book argues that while there is a possibility of conflict between international trade rules and progress on climate change, it need not be the case. Thus the major focus is on the ways in which trade measures can aid in addressing climate change.
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Chapter 10: Judging Domestic Policy

Tracey Epps and Andrew Green


CERTAINTY, FLEXIBILITY AND ENFORCEMENT Addressing climate change is likely to involve a combination of all the instruments discussed in Part III – regulations, taxes, subsidies, and border adjustments. Governments can use these instruments to overcome the market failure at the centre of climate change. The difficulty, as mentioned in various ways for the different instruments, is that these instruments also provide opportunities for protectionism and the WTO has to determine when the policies are legitimate and when they are essentially forms of cheating on trade commitments. It is critical that panels and the Appellate Body are able to sort out these different motivations. It is particularly important for developing countries, who have a large stake in ensuring that the climate change system develops in a manner that is compatible with a fair, open, and rules-based international trading system that affords them opportunities to further their growth and development.1 The discussion in the previous chapters has shown that the existing rules do not optimally allow this sorting out to happen in the context of climate change. This chapter sets out some of the general concerns with the status quo and then discusses the value of changes to how panels and the Appellate Body review domestic policies. The prior chapters on domestic policy indicate that flexibility and decentralization are essential to addressing climate change. Climate change is a global challenge and it makes no difference to the atmosphere whether GHGs are emitted in one country or another. However, efficient and effective policies require...

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