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Climate change and trade policy : from mutual destruction to mutual support

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  • Messerlin, Patrick A.

Abstract

Contrary to what is still often believed, the climate and trade communities have a lot in common: a common problem (a global"public good"), common foes (vested interests using protection for slowing down climate change policies), and common friends (firms delivering goods, services, and equipment that are both cleaner and cheaper). They have thus many reasons to buttress each other. The climate community would enormously benefit from adopting the principle of"national treatment,"which would legitimize and discipline the use of carbon border tax adjustment and the principle of"most-favored nation,"which would ban carbon tariffs. The main effect of this would be to fuel a dual world economy of clean countries trading between themselves and dirty countries trading between themselves at a great cost for climate change. And the trade community would enormously benefit from a climate community capable of designing instruments that would support the adjustment efforts to be made by carbon-intensive firms much better than instruments such as antidumping or safeguards, which have proved to be ineffective and perverse. That said, implementing these principles will be difficult. The paper focuses on two key problems. First, the way carbon border taxes are defined has a huge impact on the joint outcome from climate change, trade, and development perspectives. Second, the multilateral climate change regime could easily become too complex to be manageable. Focusing on carbon-intensive sectors and building"clusters"of production processes considered as having"like carbon-intensity"are the two main ways for keeping the regime manageable.Developing them in a multilateral framework would make them more transparent and unbiased.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5378.

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Date of creation: 01 Jul 2010
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Handle: RePEc:wbk:wbrwps:5378

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Keywords: Climate Change Mitigation and Green House Gases; Climate Change Economics; Emerging Markets; Carbon Policy and Trading; Debt Markets;

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References

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  1. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications, The World Bank, number 6889, August.
  2. Michael O. Moore, 2011. "Implementing Carbon Tariffs: A Fool’s Errand?," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 34(10), pages 1679-1702, October.
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Cited by:
  1. Nicole A. MATHYS & Jaime de MELO, 2012. "Reconciling Trade and Climate Policies," Working Papers, FERDI P37, FERDI.
  2. Nicole A. MATHYS & Jaime de MELO, 2011. "The Political Economy of Climate Change Policies: Political Economy Aspects of Climate Change Mitigation Efforts," Working Papers, FERDI P24, FERDI.
  3. Ian Sheldon & Steve McCorriston, 2012. "Climate policy and border tax adjustments: Might industrial organization matter?," EconoQuantum, Revista de Economia y Negocios, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 9(2), pages 7-28, Julio-Dic.
  4. Alessandro Antimiani & Valeria Costantini & Chiara Martini & Luca Salvatici, 2011. "Cooperative and non-cooperative solutions to carbon leakage," Departmental Working Papers of Economics - University 'Roma Tre' 0136, Department of Economics - University Roma Tre.
  5. Michael O. Moore, 2011. "Implementing Carbon Tariffs: A Fool’s Errand?," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 34(10), pages 1679-1702, October.
  6. de Melo, Jaime & Mathys, Nicole Andréa, 2010. "Trade and Climate Change: The Challenges Ahead," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8032, C.E.P.R. Discussion Papers.
  7. Mona Haddad & Ben Shepherd, 2011. "Managing Openness : Trade and Outward-oriented Growth After the Crisis," World Bank Publications, The World Bank, number 2283, August.
  8. Alexandre Le Vernoy & Patrick Messerlin, 2010. "Water and the WTO: Don’t kill the messenger," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
  9. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers, FERDI P23, FERDI.

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