Reconstructing climate policy: how best to engage China and other developing countries?

Duke University organized the International Conference on Reconstructing Climate Policy: Moving Beyond the Kyoto Impasse, May 2003. The organizer invited me to specifically address the following two issues at the conference: 1) Whether is the proposal for joint accession by the U.S. and China in the interest of China?, and 2) Even if participating a global cap-and-trade regime is so beneficial to China as many economic studies suggest, why has China consistently refused in international negotiations even to discuss its participation in it?. In this paper, we look at the first issue from the following perspectives: a) how does China value importance of maintaining unity of the Group of 77?; b) what lessons has China learned from bilateral negotiations with the U.S. to work out the terms for China to get accession to the WTO?; c) what is the legitimacy of the U.S. insistence that it re-joins the Kyoto Protocol only if major developing countries join?; d) what are implications of the U.S. strikingly reversed position on the commitments of developing countries in New Delhi for initiating discussions on joint accession by the U.S. and China?; and e) how would joint accession by the U.S. and China be perceived?. We then address the second issue from the following perspectives: a) from the point of view of fairness, how do developing countries including China and India perceive emissions caps in the first place?; b) why have China and India been sceptical to international emissions trading?; c) how is an inflow of CDM investment in China perceived politically in comparison with the exports of emissions permits to the U.S.?; d) what are the implications of “lock in” to emissions cap, in particular no rules and principles for setting emissions targets for the commitment periods subsequent to Kyoto?; e) how to address the complex undertaking of setting emissions caps for developing countries, which must be linked to future, unobserved levels in comparison with the historically observed levels for industrialized countries?. Finally, the paper touches on the likely path forward.