This edited volume collects excellent contributions to the constantly growing literature on trade and climate change. It provides a wealth of information on the interaction between international trade and climate change regimes. Even though vast literature exists on the subject, this book makes for interesting reading as it presents many additional aspects and new arguments.
The book consists of six parts. Part I lays the theoretical and conceptual foundations for all other discussions in the volume. Thomas Cottier and Tetyana Payosova open the debate by testing human response to climate change against the emerging principle of common concern. Taking a progressive approach, the authors argue that the common concern of humankind over climate change calls for actions that go beyond international cooperation, including unilateral measures. They ask the fundamental question whether in case of conflict between trade regulation and climate policy, trade rules should be interpreted in deference to the principle of common concern. In the essay on common but differentiated responsibilities (CBDR), Anastasios Gourgourinis shows that the answer to this question is far from obvious, especially in light of equity concerns. His discussion of interaction between the CBDR principle and the law of the WTO is of particular interest. Unlike others, Gougourinis argues that CBDR are not inherent to WTO rules, neither as part of the concept of sustainable development under the preamble of the WTO Agreement, nor as part of the provisions of special and differential treatment. Rather, CBDR and free trade ‘manage to stroll down parallel routes’.
Krista Nadakavukaren Schefer and Pablo Arnaiz add a new angle to the debate by looking into how the emerging concept of state responsibility to protect (R2P) in international law can potentially affect the relationship between trade and climate change. They draw an interesting parallel between the unilateral imposition of climate policy-related trade measures, which is subject to WTO rules, and humanitarian interventions conditional on unanimous authorization of the UN Security Council. Although the authors support the expansion of the R2P scope to include actions to protect populations from climate change, they also admit that there is an inherent danger of unilateral misuse of R2P for all kinds of extraterritorial actions.
Part II addresses issues of WTO consistency of climate policy-related trade measures. It opens with the issue of border carbon adjustment (BCA), covered by two contributions. The first essay by Erich Vranes deals with import-side BCA. It provides a comprehensive review of the issues arising from the imposition of carbon taxes on imports, including the adjustability of taxes on inputs not physically present in the final product and the likeness of carbon-intensive and low-carbon products. Vranes’ essay is followed by Joel Trachtman‘s review of the compliance of export-side BCA with WTO disciplines regarding subsidies. Besides export tax rebates, the author looks into different design options for carbon tax credits, which can be a viable alternative to BCA compatible with WTO rules. Adding to the analysis of subsidy rules, Sadeq Z. Bigdeli provides fascinating insights into the complex rationale behind the panel's and the Appellate Body's decision in Canada–Renewable Energy. In that dispute, the WTO adjudicative bodies were unable to determine whether a benefit was conferred to electricity generators from solar and wind energy by the Ontario's feed-in-tariff (FIT) scheme, thus avoiding a subsequent qualification of the FIT as a subsidy. According to Bigdeli, the decision was the correct one. From a functional perspective, the decision did not open the way for the unilateral imposition of countervailing duties on electricity benefiting from FIT. From a systemic perspective, by refusing to interfere with the government's right to regulate the energy market in the public interest, the decision preserved the legitimacy of the WTO.
While carbon taxes, green subsidies and other measures that governments take to tackle climate change have long become a topic of active debate in literature, the vital contribution of the private sector to climate action has received less attention. Panagiotis Delimatsis addresses this gap in his essay on international standard setting. His discussion of the role and the legitimacy of private standards and the cooperation between public and private actors on standard-setting deserves special mention. The author points to the problem of fragmentation of voluntary sustainability standards (VSS) and raises concerns about the increased compliance costs of their use, the conflicting interests between VSS regimes and their clients, and the competition among standard-setting organizations.
Turning to trade in services, Michaёl Alder, Aik Hoe Lim, and Ruosi Zhang argue that, given the increased share of services in manufactured goods, the liberalization of environmental goods in tandem with their accompanying services would be much more effective for the diffusion of green technologies. They identify a number of limits of the GATS legal framework for the liberalization of environmental services. In particular, they mention the difficulty of delimiting the scope of environmental services in the absence of a separate category of climate services in the list of services used in trade negotiations and the exclusion of public services from the scope of GATS disciplines.
Green technology diffusion also depends on intellectual property (IP) regulation, which is the focus of Matthew Rimmer‘s contribution. This essay underlines the importance of a delicate balance between a robust system of IP protection, creating incentives for innovation, and flexibilities necessary to advance legitimate public interest in technology transfer. The author calls for a WTO declaration on patents and climate technology, similar to the Doha Declaration on TRIPS and Public Health in order to reform IP protection under the TRIPS Agreement, with a view to allowing governments to promote green technology transfer as a public good.
A series of fine contributions in Part III reflect on some global challenges linked to the relationship between climate and trade policies. Vitaliy Pogoretskyy and Sergii Melnyk look into the challenge of energy security. They highlight a number of issues relevant for sustainable energy security (i.e. transit, state trading enterprises, export duties etc.), which are not adequately addressed in WTO law and thus warrant legislative or judicial clarification. The authors make an argument for negotiations of a comprehensive agreement on energy in the WTO, possibly added as a separate item to the Doha Round. Apart from ‘giving the second wind to the round making it more pertinent for some members’, negotiations on sustainable energy security in the WTO could produce a triple-win outcome, for energy security, for trade, and for climate protection.
The essay by Joseph A. McMahon focuses on the challenge of food security. It traces the efforts of WTO members to negotiate certain flexibilities in the WTO rules on agriculture in order to address food security. Underlying the complex relation with climate policy, the author advocates the adoption of safeguards against climate policy interfering with food security objectives in the context of biofuels.
From Mark Wu's excellent essay on the negotiations of an environmental goods agreement (EGA), the reader learns not only about the history of these negotiations in and outside the WTO, but also about the legal status and the mechanism for concluding plurilateral agreements. When assessing the potential contribution of a WTO EGA to climate protection, the author highlights a number of deficiencies of the negotiations. Especially worth mentioning in this respect is the exclusion from the negotiations of certain developing countries that are major GHG emitters, as well as the failure to negotiate a prohibition of trade remedies, which constitute a significant non-tariff barrier for environmental goods.
This part concludes with Roy Andrew Partain‘s essay telling the captivating story of green paradox phenomena, where climate laws create wrong economic incentives that lead to increased emissions. One well-known example of a green paradox is carbon leakage caused by domestic restrictions on carbon; other examples relate to energy efficiency and support of renewable energy. The author shares some interesting thoughts on how to tackle paradoxes of green industrial policy under WTO rules.
Part IV adds a regional dimension to the discussion on interaction between trade and climate change. It opens with Margaret A. Young's essay on implications of international rules of jurisdiction, which thematically echoes the first part of the book on theoretical foundations of the trade–climate change debate. The author rejects the view that domestic trade restrictions linked to climate change are of an extraterritorial nature and provides an interesting discussion on how to address adverse effects of such measures on indigenous peoples.
The next two essays by Emily Reid and Floor Fleurke focus on EU climate law. Emily Reid highlights differences in the approaches of the European Court of Justice (ECJ) and of the WTO to adjudicating environmental disputes. Unlike the WTO adjudicative bodies, the ECJ recognizes environmental protection as an imperative requirement, or an affirmative duty, as opposed to a mere basis for exceptions to trade rules. This affirmative obligation to protect the environment, combined with a privileged status of environmental measures under EU law, has led the ECJ to reject violation claims, even when the contested environmental measures were subjected to a strict test of proportionality. Had these claims been brought before the WTO dispute settlement system, the outcome would likely have been different. Floor Fleurke then focuses on the human rights aspect of the EU climate regime, particularly the role that the ECJ can play in empowering EU citizens to enforce climate laws. She argues that such individual empowerment could emerge from the conceptualization of climate law as an extension of the right to a clean environment, which is recognized in the constitutions of some EU Member States.
Turning to free trade agreements, James Munro provides a useful overview of provisions related to climate change mitigation and adaptation in EU and US FTAs, as well as in FTAs concluded by countries that are parties to the Transpacific Partnership. He examines the divergent approaches of those countries in dealing with environmental matters under FTAs in light of their impact on the scope of climate provisions in future FTAs. An important difference identified by the author concerns the enforcement of environmental provisions. The US approach of subjecting environmental provisions to general dispute settlement under FTA could “give teeth” to climate change provisions, as it would expose the FTA parties to the risk of tangible economic costs in case of non-compliance.
Part V of the volume explores the linkages of climate policy with investment protection and provides an excellent contribution to the literature on the interaction of investment and environmental law. This part opens with Angelos Dimopoulos’ essay on investment–state dispute settlement. Although the author is generally optimistic about the ability of investment tribunals to accommodate climate change concerns, he nevertheless emphasizes the need for ISDS reform. This reform needs to address the lack of transparency and the limited participation of civil society in investment arbitration processes that involve climate change and other issues of public concern. It should also induce investment tribunals to be more flexible when determining the damages, by taking into account the public policy objectives of the measure at issue. Moreover, the reform should ensure consistent interpretation by investment tribunals of overlapping norms of the investment and climate change regimes.
J. Antony VanDuzer follows with an examination of the policy space that host states enjoy under international investment agreements (IIAs) to take climate policy measures. Because tribunals do not have a uniform approach to the application of investment protection standards and because they are always faced with case-specific facts, the author is unable to derive general conclusions on how these tribunals handle policy space. Nevertheless, he concludes on a positive note by referring to the public policy safeguards in the new generation of IIAs. He further makes a valid point that the absence of such safeguards in the majority of IIAs concluded in the past is one more argument in favour of a multilateral agreement on investment.
Julien Chaisse completes the climate change–investment discourse by delving into the international trade and investment rules on performance requirements (PRs). He analyses the impact of PRs on the policy space of host states and on the behaviour of investors in the renewable energy sector. The author's review of relevant jurisprudence shows that states usually have sufficient policy space in this regard. Nevertheless, the author comes to an interesting conclusion: Given that PRs are part of the substantive treatment of foreign investors, states must apply them on a MFN-basis. This, according to the author, will lead to more TRIMS-plus prohibitions on PRs, which may constrain the promotion of renewable energy.
In the final Part VI, Ludivine Tamiotti and Daniel Ramos conclude the volume's rich discourse by highlighting the institutional role of the WTO in addressing challenges in the interaction between the trade and climate change regimes. Looking into the areas of dispute resolution, trade policy review and negotiations, they trace the progress on the way to cooperation and mutual supportiveness between the two regimes. They also note that, given the lack of jurisprudence on issues at the intersection of trade and climate policies, efforts to clarify them in academic literature are extremely useful.
This volume proves the truth of the last statement in every respect. This is not least due to the skillful editing by Panagiotis Delimatsis who not only brought together leading experts, but also expanded the scope of covered issues to the areas of regionalism and investment. Especially this latter point sets apart this volume from other books on the subject. Of course, time does not stand still. When this volume was practically finalized, two important developments took place in international fora, namely, the adoption of the 2030 Agenda for Sustainable Development and the conclusion of the Paris Agreement. As the world moves on to implementing these new commitments, the relevance of trade and trade measures increases. How this will further affect the interaction between the trade and climate regimes remains a subject for future research.
