Trade and Climate Change

Trade and Climate Change

Trade and Climate change, match on!

A trade war might spark off with the countries trying to meet the compliance of emissions reductions writes blogger Rishabh Kaul
I think IPCC and the UN has made it clear that for the world to cut down on emissions and for global climate targets to be reached, trade between nations cannot exist in the business as usual (BAU) scenario. For example take the case of EU filing a complaint against the Chinese for their high duty on exported metals many of which are produced only in China. They complained saying China due to their local industries could procure them at dirt cheap prices and then to reduce over protection and carbon emissions started exporting them to EU, with which it has had a massive increase in trade over the last few years. This also made many people raise their eyebrows against China’s effort to reduce emissions.

With the Copenhagen treaty so close, one can only imagine how the treaty will affect the trade scenario in the world. Under this treaty many Annex-2 countries might be signing legally binding treaties to reduce carbon emissions. The manner in which these regulations are imposed might give some of the nations an unfair advantage as was seen in the case of China.

The problem arises because the trade related issues come into the jurisdiction of WTO which under their present laws does not address the issue of climate change affecting trade competitiveness.

So what might happen in the future?

No one knows, but there are some assumptions one can make based on the current scenarios. Compliance pertaining to climate change might lead to the induction of border taxes and other trade regulations from nations and so WTO needs to be ready to make such provisions for right now the loopholes seem immense for developing nations to leverage. Because in such a case nations like India, China and other manufacturing economies might ultimately have to trade at the US’s discretion. Another reason why this...

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