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Climate policy options and the World Trade Organization

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  • Hufbauer, Gary Clyde
  • Kim, Jisun

Abstract

This paper examines whether the climate policy options policymakers are contemplating are compatible with core principles of the world trading system set forth in the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), and Appellate Body decisions. The authors argue that border measures both import restrictive measures and export subsidies contemplated in US climate bills and the climate policies of other countries stand a fair chance of being challenged in the WTO. Given the prospect of foreseeable conflicts with WTO rules, the authors suggest that key WTO members should attempt to negotiate a new code that delineates a large 'green space' for measures that are designed to limit GHG emissions both within the member country and globally. By 'green space,' the authors mean policy space for climate measures that are imposed in a manner broadly consistent with core WTO principles even if a technical violation of WTO law could occur. To encourage WTO negotiating efforts along these lines, the authors recommend a time-limited 'peace clause' to be adopted into climate legislation of major emitting countries. The peace clause would suspend the application of border measures or other extraterritorial controls for a defined period while WTO negotiations are under way.

Suggested Citation

  • Hufbauer, Gary Clyde & Kim, Jisun, 2009. "Climate policy options and the World Trade Organization," Economics Discussion Papers 2009-20, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:7584
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    File URL: http://www.economics-ejournal.org/economics/discussionpapers/2009-20
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    File URL: https://www.econstor.eu/bitstream/10419/27501/1/dp2009-20.pdf
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    References listed on IDEAS

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    1. Gary Clyde Hufbauer & Steve Charnovitz & Jisun Kim, 2009. "Global Warming and the World Trading System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4280.
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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. Silverstein, David N., 2011. "Using a harmonized carbon price framework to finance the Green Climate Fund," MPRA Paper 35280, University Library of Munich, Germany.
    3. Silverstein, David N., 2010. "A method to finance a global climate fund with a harmonized carbon tax," MPRA Paper 27121, University Library of Munich, Germany.

    More about this item

    Keywords

    Global warming climate change; climate policy options; world trading system; world trade organization; WTO; border measures;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • 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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