Climate Mitigation Trade Policy at Work

Synergising Trade and Climate Talks: How Can the WTO and UNFCCC Learn From Each Other?

This study seeks to help UNFCCC and WTO delegates better understand each other’s roles and working model. It shades light on some common topics of interests for both WTO and UNFCCC delegates, and how they can learn from each other to potentially enhance synergies and support each other mandate in a sustainable way.

Whilst the United Nations Framework Convention on Climate Change (UNFCCC) and the World Trade Organization (WTO) are two distinct international organizations with their own mandates, objectives and ways of functioning, it happens that they are dealing with some common issues of concern, including: trade, environment/climate change and agriculture, among others.

The United Nations Framework Convention on Climate Change, giving birth to the UNFCCC itself in 1992, mentioned trade in its article 3 “Principles”. Trade per se is also mentioned once in the Kyoto Protocol, in its article 2.3.1 UNFCCC members recognize that the fight against climate change should not negatively impact trade relations between countries. Trade is more considered by UNFCCC members as a tool to achieve their mitigation objectives. For example, the Kyoto Protocol established flexible market mechanisms, which are based on the trade of emissions permits, creating what is known as the carbon market. The three market mechanisms are Clean Development Mechanism (CDM), Joint implementation (JI) and Emissions Trading (ET).

In 2015, UNFCCC members went beyond the Kyoto Protocol and adopted the Paris Climate Agreement. The agreement aims to strengthen the ability of countries to deal with the impacts of climate change. To reach the ambitious goal of keeping a global temperature rise well below 2 degrees Celsius, appropriate financial flows, a new technology framework and an enhanced capacity building framework will have to be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. Keeping in mind the country members of WTO and UNFCCC are nearly the same, there are several domains where climate actions decided in Bonn might be supported, or else hindered, by what their WTO counterparts are discussing in Geneva, e.g: (i) Market mechanisms & Emissions trading; (ii) implementation of NDCs (Nationally Determined Contributions); and (iii) Technology transfer mechanisms.

Sustainable development and protection and preservation of the environment are among the fundamental goals of the WTO. They are enshrined in the Marrakesh Agreement of 1994, which established the WTO, and complement the WTO’s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. In Marrakesh, ministers also signed a specific “Decision on Trade and Environment” and called for the creation of the Committee on Trade and Environment (CTE). It is the standing forum dedicated to dialogue between governments on the impact of trade policies on the environment, and of environment policies on trade. The CTE is open to the entire WTO membership, with some international organizations as observers.

While there is no specific agreement dealing with the environment, and the issue of climate change, per se, is not part of the WTO’s ongoing work programme, under WTO rules members can adopt trade-related measures aimed at protecting the environment provided a number of conditions to avoid the misuse of such measures for protectionist ends are fulfilled.

While cooperation is already taking place between the WTO and the UNFCCC, as UNFCCC representatives participate in meetings of the regular WTO CTE and as ad hoc observer to the CTE in Special Session, while the WTO secretariat attends UNFCCC Conference of Parties (COP) meetings; there are areas in which both organizations might adopt supportive positions, including in agriculture.

UNFCCC and WTO have also been facing some similar challenges in their operations. Two important challenges relate to: i) issues related to differences among members due to their different level of development and capacities that is at the heart of the concept of special and differential treatment for developing countries, and ii) involvement of non-state stakeholders in their negotiations and day-to-day processes. The way each organization has (tried to) tackle these challenges can have lessons for the other in being more inclusive and taking more coherent actions/decisions.

Regarding the application of a key UNFCCC principle of « common but differentiated responsibilities and respective capacities (CBDR- RC) », and perhaps realising the futility of a priori defining “respective capabilities”, UNFCCC negotiators adopted a more pragmatic approach. In the UNFCCC negotiations starting from Durban in 2011, members have allowed countries to individually determine their “contribution” to addressing GHG emissions. In 2015, 196 Parties agreed to undertake Nationally Determined Contributions (NDCs) as part of their commitment to align their economic development with the goal of sustainable development. A similar pragmatic approach may be needed at the WTO where the 2 NGOs and the WTO, WTO, 2019.

Retrieved from. discussions/negotiations regarding the special and differential treatment (S&DT) for developing and leat-developed countries have been stuck for years now.

WTO members established a legal basis for consultation and cooperation with NGOs, back in 1995, recognising “the role NGOs can play to increase the awareness of the public in respect of WTO activities” and agreed “to improve transparency and develop communication with NGOs” by giving the WTO Secretariat the authority to establish direct contacts with NGOs. NGOs can be accredited to take part in Ministerial Conferences and attend public hearings of some dispute settlement proceedings.2 But they cannot be granted permanent observer status to NGOs and their access to WTO documents remains constrained. On the other hand, the UNFCCC is said to have relatively generous rules for the non- state actors (NSAs) concerning access to documentation, making statements, submission of written input and consultations with the presiding officers and the Executive Secretary.

Some important and relevant initiatives in this regard include: the Marrakesh Partnership for Global Climate Action that was launched in 2016, and the Talanoa Dialogue which was held in Katowice, Poland on January 2018 Climate and trade negotiators should be more aware of what their counterparts are doing, and interact more, to develop holistic international approaches that contribute to sustainable development of their countries. Finally, WTO and UNFCCC should find ways to function in a more coherent manner to contribute to the achievement of Sustainable Development Goals (SDGs) – the universally agreed framework for poverty eradication, inclusive growth and sustainable development.