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Domestic Climate Policies and the WTO

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  • ZhongXiang Zhang
  • Lucas Assunao

Abstract

The Kyoto Protocol gives Annex 1 countries considerable flexibility in the choice of domestic policies to meet their emissions commitments. Possible climate policies include carbon/energy taxes, subsidies, energy efficiency standards, eco-labels, and government procurement policies. In order to meet their targets with minimum adverse effects on their economies, Annex 1 governments with differentiated legal and political systems are highly likely to pursue these policies that may have the potential to bring them into conflict with their WTO obligations. This paper explores the potential interaction between these domestic climate policies and WTO rules. It argues that their potential conflicts can be avoided or at least minimised if WTO rules are carefully scrutinised, and efforts are made early on to ensure that the proposed climate policies comply with them. It suggests an early process of pursuing consultations between WTO members and the Parties to the Climate Change Convention and points to the need of further exploring ways to enhance synergies between the trade and climate regimes. Copyright 2004 Blackwell Publishing Ltd.

Suggested Citation

  • ZhongXiang Zhang & Lucas Assunao, 2004. "Domestic Climate Policies and the WTO," The World Economy, Wiley Blackwell, vol. 27(3), pages 359-386, March.
  • Handle: RePEc:bla:worlde:v:27:y:2004:i:3:p:359-386
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    References listed on IDEAS

    as
    1. ZhongXiang Zhang, 2000. "Estimating the size of the potential market for the Kyoto flexibility mechanisms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(3), pages 491-521, September.
    2. James Poterba & Julio Rotemberg, 1995. "Environmental taxes on intermediate and final goods when both can be imported," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 221-228, August.
    3. Jackson, J.H., 1992. "World Trade Rules and Environmental Policies: Congruence or Conflict?," Working Papers 317, Research Seminar in International Economics, University of Michigan.
    4. ZhongXiang Zhang, 1998. "The Economics of Energy Policy in China," Books, Edward Elgar Publishing, number 1291.
    5. Baranzini, Andrea & Goldemberg, Jose & Speck, Stefan, 2000. "A future for carbon taxes," Ecological Economics, Elsevier, vol. 32(3), pages 395-412, March.
    6. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    7. Manne, Alan S. & Richels, Richard G., 1993. "The EC proposal for combining carbon and energy taxes The implications for future CO2 emissions," Energy Policy, Elsevier, vol. 21(1), pages 5-12, January.
    8. Michael Hoel, 1991. "Efficient International Agreements for Reducing Emissions of CO2," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 93-108.
    9. Bohringer, Christoph & Rutherford, Thomas F., 1997. "Carbon Taxes with Exemptions in an Open Economy: A General Equilibrium Analysis of the German Tax Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 189-203, February.
    10. repec:fth:michin:317 is not listed on IDEAS
    11. Barker, Terry & Baylis, Susan & Madsen, Peter, 1993. "A UK carbon/energy tax : The macroeconomics effects," Energy Policy, Elsevier, vol. 21(3), pages 296-308, March.
    12. Zhang, ZhongXiang, 2001. "An assessment of the EU proposal for ceilings on the use of Kyoto flexibility mechanisms," Ecological Economics, Elsevier, vol. 37(1), pages 53-69, April.
    13. Peter Hoeller & Jonathan Coppel, 1992. "Energy Taxation and Price Distortions in Fossil Fuel Markets: Some Implications for Climate Change Policy," OECD Economics Department Working Papers 110, OECD Publishing.
    14. Zhang, ZhongXiang, 1998. "Greenhouse gas emissions trading and the world trading system," MPRA Paper 12971, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Zhang, Zhong Xiang, 2012. "Competitiveness and Leakage Concerns and Border Carbon Adjustments," International Review of Environmental and Resource Economics, now publishers, vol. 6(3), pages 225-287, December.
    2. ZhongXiang Zhang, 2012. "Climate Change Meets Trade in Promoting Green Growth: Potential Conflicts and Synergies," Chapters,in: Responding to Climate Change, chapter 6 Edward Elgar Publishing.
    3. ZhongXiang Zhang, 2013. "Trade in environmental goods, with focus on climate-friendly goods and technologies," Chapters,in: Research Handbook on Environment, Health and the WTO, chapter 19, pages 673-699 Edward Elgar Publishing.
    4. Zhang, ZhongXiang, 2008. "Asian energy and environmental policy: Promoting growth while preserving the environment," Energy Policy, Elsevier, vol. 36(10), pages 3905-3924, October.
    5. Bao, Qin & Tang, Ling & Zhang, ZhongXiang & Wang, Shouyang, 2013. "Impacts of border carbon adjustments on China's sectoral emissions: Simulations with a dynamic computable general equilibrium model," China Economic Review, Elsevier, vol. 24(C), pages 77-94.
    6. Mehdi Abbas, 2007. "Taxe CO2 aux frontières, régime commercial multilatéral et lutte contre le changement climatique," Post-Print halshs-00168960, HAL.
    7. ZhongXiang Zhang, 2014. "Energy Prices, Subsidies and Resource Tax Reform in China," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 439-454, September.
    8. ZhongXiang Zhang, 2010. "The U.S. proposed carbon tariffs, WTO scrutiny and China’s responses," International Economics and Economic Policy, Springer, vol. 7(2), pages 203-225, August.
    9. Zhang, ZhongXiang, 2009. "Multilateral trade measures in a post-2012 climate change regime? What can be taken from the Montreal Protocol and the WTO?," Energy Policy, Elsevier, vol. 37(12), pages 5105-5112, December.
    10. Zhang, ZhongXiang, 2009. "Liberalizing climate-friendly goods and technologies in WTO environmental goods negotiations: product coverage, modalities, challenges and the way forward," MPRA Paper 16943, University Library of Munich, Germany, revised 10 Aug 2009.
    11. Charles Mason, 2011. "Eco-Labeling and Market Equilibria with Noisy Certification Tests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(4), pages 537-560, April.
    12. World Bank, 2007. "International trade and Climate Change : Economic, Legal, and Institutional Perspectives," World Bank Publications, The World Bank, number 6831.
    13. Li, Aijun & Zhang, Aizhen & Cai, Hongbo & Li, Xingfeng & Peng, Shishen, 2013. "How large are the impacts of carbon-motivated border tax adjustments on China and how to mitigate them?," Energy Policy, Elsevier, vol. 63(C), pages 927-934.
    14. ZhongXiang Zhang, 2012. "Institutional and policy frameworks for sustainable infrastructure," Chapters,in: Infrastructure for Asian Connectivity, chapter 8, pages 254-300 Edward Elgar Publishing.
    15. Bao, Qin & Tang, Ling & Zhang, ZhingXiang & Qiao, Han & Wang, Shouyang, 2012. "Impact of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibirum Model," Working Papers 249391, Australian National University, Centre for Climate Economics & Policy.
    16. ZhongXiang Zhang, 2013. "Energy and Environmental Issues and Policy in China," Working Papers 2013.92, Fondazione Eni Enrico Mattei.
    17. Claudia Schatan & Liliana Castilleja, 2007. "The maquiladora electronics industry on Mexico’s northern border and the environment," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(2), pages 109-135, June.
    18. van Asselt, Harro & Biermann, Frank, 2007. "European emissions trading and the international competitiveness of energy-intensive industries: a legal and political evaluation of possible supporting measures," Energy Policy, Elsevier, vol. 35(1), pages 497-506, January.
    19. Mathews, John, 2007. "Seven steps to curb global warming," Energy Policy, Elsevier, vol. 35(8), pages 4247-4259, August.
    20. Kemfert, Claudia & Zhang, ZhongXiang, 2003. "Linking developing country's cooperation on climate control with industrialized country's R&D and technology transfer," MPRA Paper 41473, University Library of Munich, Germany.
    21. Low, Patrick & Marceau, Gabrielle & Reinaud, Julia, 2011. "The interface between the trade and climate change regimes: Scoping the issues," WTO Staff Working Papers ERSD-2011-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    22. repec:jes:wpaper:y:2012:v:4:p:256-273 is not listed on IDEAS
    23. Margareta Timbur, 2012. "Multilateral Environmental Agreements And The Trade Measures Contained In These Agreements," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(2), pages 256-273, June.
    24. Zhang, ZhongXiang, 2009. "Encouraging developing country involvement in a post-2012 climate change regime: carrots, sticks or both?," MPRA Paper 13174, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • F18 - International Economics - - Trade - - - Trade and Environment
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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