October 10, 2010

Trade and Climate Change: The Challenges Ahead

by Jaime de Melo and Nicole Andréa Mathys

- The outcome of the 15th conference of the Parties to the UNFCC showed a shift from a top-down approach with a collective target favoring environmental objectives to a bottom-up accord favoring political feasibility with no meaningful binding agreement in sight as the global climate regime and the global trade policy regime represented by the WTO appear to be on a collision course. Following a review of the alternative architectures for the next Climate Change Agreement, the paper outlines four areas in which trade will play a role: as a purveyor of technological transfer; as a mechanism to separate where abatement takes place from who bears the cots of abatement; as a participation mechanism; and as a way to address the pressures for border adjustments.

de Melo, J. and N.A. Mathys (2010). "Trade and Climate Change: The Challenges Ahead." CEPR Discussion Paper No. DP8032, Sept 2010.