[E-rundbrief] Info 570 - G8-WTO-clash climate deal

Di Jul 10 18:18:03 CEST 2007

E-Rundbrief - Info 570 - Victor Menotti (IFG/ 
USA): G8 climate deal ducks looming clash with 
WTO. Heiligendamms false promise must be addressed in Bali.

Bad Ischl, 10.7.2007

Begegnungszentrum für aktive Gewaltlosigkeit

www.begegnungszentrum.at

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G8 climate deal ducks looming clash with WTO

Heiligendamms false promise must be addressed in Bali

by Victor Menotti

July 2007

Persuading George W. Bush, the US president, to 
embed his climate-change initiative in the UN-led 
Kyoto process, however, was a substantial 
achievement, according to European diplomats and 
non-government organizations, reported the 
Financial Times in its coverage of the G8s 2007 
Summit in Heiligendamm, Germany.[i]

But hold the champagne; a larger fights looms 
over who holds real power to determine any global 
climate regime: the United Nations (UN) or the 
World Trade Organization (WTO).  While European 
news networks cheered, it went entirely unsaid 
that 150 national governments have already 
empowered the WTO to allow Member Nations to 
challenge almost any measure to reduce greenhouse 
gas emissions enacted by any other Member, 
according to Mitsuo Matsushita, an ex-panelist 
who ruled against the US Clean Air Act in the 
WTOs first dispute resolution case in 1996. [ii]

Heiligendamms so-called victory reinforces a 
false sense of security that ignores the bigger 
clash between any meaningful global climate 
regime and current world trade rules. Worse, the 
G8 Final Communiqué urges rapid completion of the 
WTO Doha Round, which would expand WTOs powers 
over climate policies enormously.[iii]

To begin moving toward international relations 
that promote global sustainable development, 
world leaders should address the inevitable clash 
between these two systems of international law at 
the UNs upcoming climate summit in Bali.

FAKE FIGHT OBSCURES FOCUS ON GOVERANCE ISSUES

President Bush surprised many people only days 
before the G8 Summit by announcing that, the 
United States will convene a series of meetings 
of nations that produce the most greenhouse gas 
emissions, including nations with rapidly growing 
economies like India and China
 This new 
framework would help our nations fulfill our 
responsibilities under the U.N. Framework Convention on Climate Change.[iv]

For people rightly concerned about US 
unilateralism, Bushs direct deference to UN 
processes should have come as a pleasant 
surprise.  Still, some were concerned by the fact 
that he said, the US will convene, causing them 
to wonder whether this was Bushs latest 
unilateralist spasm or an honest effort to 
express that America was, at last, ready to lead. 
German Chancellor Angela Merkel and British Prime 
Minister Tony Blair may have exacted a useful 
clarification that Bush use the UN, but it is 
more than likely his proposal was still 
half-baked and fuzzy on details.  Whats 
important is that President Bush wants a deal 
signed before he leaves office in 18 months and 
fossil fuel interests know theyll never get a 
better chance at a sweeter deal than now.

The problem is that the UN relies on trade 
measures to enforce its multilateral 
environmental agreements (MEAs) while the WTO 
generally prohibits restrictions on trade.  WTO 
has a legal personality to enforce its laws, 
but they can conflict with the trade measures 
used in the UNs MEAs.  The UN Framework 
Convention on Climate Change (UNFCCC) and its 
Kyoto Protocol both aim to conform to WTO rules 
but when national governments act to cut 
emissions they run into trade rules.  As climate 
and energy policies begin to move market 
beavhior, they are increasingly being viewed as 
illegal barriers to trade, such as Europes 
proposed Kyoto tax, Americas fuel efficiency 
standards, alternative fuels programs, and others noted below.

WTOs approach to energy can promise neither 
climate protection nor energy security because 
its mission is to reduce the role of government 
whereas what is needed now are explicit 
government measures that send market signals to 
investors and consumers that redirect their 
decisions about what sort of energy to produce 
and consume at a rate and scale that respects ecological limits.

With the death of Doha seemingly imminent, US 
fast track negotiating authority expired, and 
the Democrats who now control Congress rethinking 
approaches to trade policy, a political space has 
opened to explore the links between trade, 
climate change, and energy security.  The trade 
and climate policy communities need to 
collaborate to create trade rules that can 
accommodate what governments need to do to 
deliver a stable and sustainable energy future.

GET THE BALL ROLLING IN BALI

The UN Framework Convention on Climate Change, 
which will next meet December 3-14, 2007 in Bali, 
Indonesia, should include in its agenda the need 
to address trade policies if any post-Kyoto 
global climate regime is to actually be 
effective. Although key climate policy leaders 
are aware of the trade tensions with WTO, no 
organized effort exists to take on the looming 
threat it poses to any meaningful multilateral 
regime to tackle climate change.  Whats at stake 
are peoples rights to use their governments to 
shift to socially stable and ecologically sustainable energy supplies.

Some key climate policies threatened by WTO rules include:

*  European Ministers of Environment and Industry 
proposed a Kyoto tax on imports from countries 
without carbon controls but the idea was 
dismissed out of hand by European Trade 
Commissioner Peter Mandelson as a violation of 
WTO rules.  Without some fair way to adjust 
carbon costs of imports, domestic industries will 
continue to oppose strong action due to unfair 
competition from countries with no climate regime.[v]

* The United States single most effective 
measure for reducing greenhouse gas emissions 
would be to approve the stronger standards for 
fuel efficiency now being considered by Congress, 
however the Senate Finance Committees 
International Trade Counsel is not aware of the 
fact that CAFÉ standards were already deemed 
discriminatory against European auto exports 
and knows of no changes in the current CAFÉ 
proposals to make them conform.[vi]  Nor has 
Europe renounced the possibility of repeating its 
successful challenge against the US.[vii]

*  Biofuels are rapidly expanding so the Bush and 
Lula governments recently agreed to cooperate on 
establishing new rules in the WTO to govern their 
trade, possibly prohibiting the use of any 
sustainability criteria now being mandated by 
Europe and some US states.  Also, the European 
Biofuels Board is calling on Mandelson to launch 
a challenge against the US biofuels programs as a 
violation of WTO rules prohibiting subsidies for 
any specific product, even if they are renewable fuels.[viii]

*  Carbon trading in a globalized market was a 
top G8 priority for Britains Mr. Blair.[ix] 
European Union and World Bank officials have 
endorsed such a market, noting that it must be 
made consistent with WTO. The US has formally 
proposed putting climate protection services 
under the WTO, which could make illegal any 
requirements to preference local communities, 
exclude monocultures, or limit market share. 
[x]   Carbon taxes are also at risk in WTO 
because of the way they would impact imports; 
legal analyses show that trade challenges are all but certain.[xi]

* Both the United States and the European Union 
are now pressuring energy-exporting nations to 
open their markets for energy services to allow 
Halliburton and others to enter without 
limitations on what type of energy resources can 
be exploited or what type of technology can be 
used.[xii]  The US Trade Representative calls 
energy services a breakthrough sector that must 
be delivered to complete the Doha Round. Nigeria, 
Indonesia, Brazil, and perhaps others, are 
preparing to submit formal offers to liberalize their energy services.

The G8s May 14, 2007 draft listed that its 
foremost global solution to climate change was 
to work toward the reduction or, as appropriate, 
the elimination of tariff and non-tariff barriers 
to environmental goods and services through the WTO Doha negotiations.

CLEAN ENERGY SOVEREIGNTY REQUIRES NEW TRADE RULES

The world needs new trade rules for clean energy 
sovereignty, which is the freedom of regional, 
national and local communities to promote and 
protect their own autonomous and ecologically 
sustainable energy systems. Of course, we need 
international cooperation but expanding WTOs 
power over energy and climate policies is not the 
way.  The logic of USTRs proposal ignores the 
conclusion of its own recent study that demand 
for renewable energy services is driven largely 
by government policies including those that stem 
from national obligations under international 
environmental agreements.[xiii]  We must reduce 
the rigidity of trade disciplines over all natural resources.

The Bali meeting should clarify that full 
authority over international policies for energy 
and climate belongs under the United Nations, not 
the WTO, and that governments will coordinate to 
change world trade rules to, at least:

  Ensure that domestic regulation and 
standard-setting needed to shift toward socially 
stable and ecologically sustainable energy 
supplies stays under the control of domestic 
democratic policy processes and is supported by 
international climate and energy agencies, not 
transferred to international trade 
bureaucracies.  This re-directs trade negotiators 
away from the dangerous direction of current 
talks on Energy Services (where some propose to 
establish new criteria for justifying domestic 
regulations) and Energy Goods (where energy 
efficiency standards may become more vulnerable 
to challenge as Non-Tariff Barriers);

  Allow specific subsidies for promoting 
renewable energy programs and practices. This 
instructs trade negotiators to change current 
subsidies rules to avoid challenges against renewable energy;

  Promote a fair balance between promoting 
access to clean energy technologies and 
protecting innovation in developing 
nations.  This advises trade negotiators to avoid 
repeating the intellectual property trap that 
pharmaceutical patent-holders have gotten caught 
in so that we can expedite the transfer of climate-friendly technologies;

 Re-establish the rights of nations to freely 
determine the country of origin, scale of 
production, and environmental impact of their 
energy imports so they can pursue energy 
sovereignty and protect climate stability.  This 
urges changes to basic trade principles that now 
prevent using market access to secure stable and sustainable energy supplies;

 Encourage governments to freely implement 
multilateral environmental agreements (MEAs) such 
as the United Nations Kyoto Protocol, by 
exempting the trade measures needed to enforce 
them from WTO challenges.  This establishes a 
clear hierarchy of sustainable development 
imperatives over trade interests, and could be 
the single most effective way to address the issue in one fell swoop.

*  *  *

The Bali meeting aims to create a new 
comprehensive framework for countering climate 
change. Including trade issues will, of course, 
not change the trade issues per se because that 
must be done formally in the trade bodies 
themselves.  But as the foremost body empowered 
to discuss and determine what actions the world 
will collectively take to protect our common 
future, the 13th Convention of the Parties 
(COP-13) of the UNFCCC meeting in Bali has an 
obligation to send a strong signal to trade 
ministers and the trade policy community that 
trade rules must accommodate the climate challenge.

______________________________________________________

*  Victor Menotti vmenotti at ifg.org is Program 
Director at the International Forum on 
Globalization www.ifg.org <http://www.ifg.org>

[i] Cheers all round for winner Merkel, by 
Bertrand Benoit and Hugh Williamson in 
Heiligendamm and Andrew Ward in Rostock, Financial Times, June 9, 2007.

[ii]   Interview at side event sponsored by the 
Center for International Environmental Law at the 
Fifth Ministerial of the World Trade Organization in Hong Kong, December 2005.

[iii]   The Other Oil War: Halliburtons Agenda 
at the WTO, by Victor Menotti, IFG, 
www.ifg.org/reports/WTO-energy-services.htm 
<http://www.ifg.org/reports/WTO-energy-services.htm> June 2006.

[iv] President Bush Discusses United States 
International Development Agenda, Ronald Reagan 
Building and International Trade Center, Washington, D.C., May 31, 2007.

[v]   EU trade chief to reject green tax 
plan, Financial Times, by Andrew Bounds, 
www.ft.com/cms/s/9dc90f34-8def-11db-ae0e-0000779e2340.html 
<http://www.ft.com/cms/s/9dc90f34-8def-11db-ae0e-0000779e2340.html> 
, December 17 2006.

[vi] Conversation with International Trade 
Counsel of the US Senate Finance Committee on June 27, 2007.

[vii]   United States- Taxes on Automobiles: 
Report of the Panel, General Agreement on 
Tariffs and Trade, September 29, 1994. 
www.law.georgetown.edu/iiel/cases/US-Automobiles(abr).pdf

[viii]   European Biodiesel Board letter to 
European Trade Commissioner, Peter Mandelson, 
Re: International trade of biodiesel-unfair 
competition from B99 subsidized exports from US 
and Argentinean Differential Export taxes (DETs), March 19, 2007.

[ix]   Berlin Speech given  by Tony Blair on 
climate change. 
www.britischebotschaft.de/en/news/items/070603.htm, 3 June 2007.

[x] Revised U.S. Services Offer to the WTO, 
www.ustr.gov/Trade_Sectors/Services/ 
2005_Revised_US_Services_Offer/Section_Index.html?ht=;

[xi]   US Federal Climate Policy and 
Competitiveness Concerns: The Limits and Options 
of International Trade Law, Joost Pauwelyn, Law 
Professor, Duke University, April 2007.

[xii]    The Other Oil War: Halliburtons Agenda 
at the WTO, by Victor Menotti, IFG, 
www.ifg.org/reports/WTO-energy-services.htm 
<http://www.ifg.org/reports/WTO-energy-services.htm> June 2006.

[xiii]   Renewable Energy Services: An 
Examination of US and Foreign Markets, 
Investigation No. 332-462, US International Trade 
Commission, Washington, D.C., October 2005.

Victor Menotti: vmenotti @ IFG.ORG

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