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GREAT insights Magazine

How the WTO can implement the Paris Agreement

May 2016

Saner, R. 2016. How the WTO can implement the Paris Agreement. GREAT Insights Magazine, Volume 5, Issue 3. May/June 2016.

Greening the World Trade Organization is an imperative to accompany the implementation of the Paris Agreement.


COP 21 implementation


Climate change remains a serious threat to mankind despite the moment of hope after the successful conclusion of the COP21 last December with the Paris Agreement. Promises given at COP21 to implement mitigation and adaptation measures are based on non-binding proposals causing doubt about what the signatory countries will really do about reducing their greenhouse gases (GHG) emissions. There are several ways to tackle climate change, and break business-as-usual patterns through new technologies, a global carbon tax and greening the World Trade Organization (WTO) agreements.


Technology options


As a way of alleviating doubts about governments’ intentions to reduce climate change, some environmentalists take refuge in the belief that new technologies will be developed that can help generate the needed abatement of GHG and that such new technology could be developed, sold and used based on a ‘business as usual’ approach to protection of intellectual property rights (IPRs) – an approach which has not led to reduction of GHGs. Alternative solutions are needed.


A carbon tax


An increasing number of environmen-talists are calling for a carbon tax to stop the frantic increase of life endangering externalities. While a carbon tax is a first step towards stopping ‘business as usual’, implementing a carbon tax would require extraordinary efforts in measuring and labelling carbon content of goods and services. In view of globalisation, this would mean that goods have to be followed, checked and labeled from initial stage to final product stage. Still, a carbon tax is a laudable effort to bring about carbon truth.


Developing countries’ own endeavours


Most of the poorest developing countries are not benefitting from global trade: they are in desperate need of food and often do not have sufficient energy resources hence their citizens continue to cut trees to generate minimal traditional forms of energy. The consequences include land erosion, desertification and inundation, which can lead to conflicts and migration.

It is therefore essential that countries that cannot afford alternative green energy technologies can produce alternative green energy on their own, at home. In doing so, they can contribute to mitigation and adaptation rather than having to wait for eventual handouts such as capacity building support, trade preferences and special loan arrangements. Moreover, the continued economic stagnation and the increasing costs of coping with mass migration and terrorism leads to developed countries cutting their aid to the poor developing countries and taking back some of the special preferences.


Greening WTO agreements


Developing countries need a firm commitment by the wealthy industrialised countries that they will be given access to alternative green technology and related high tech innovations. This could be done if we reconsider some of the basic rules of the WTO that govern intellectual property rights, investment measures and preferential market access rules and regulations.


Green TRIPS


A green approach to the so-called TRIPS, the WTO Agreement on Trade-related Aspects of Intellectual Property Rights, could provide a framework to support technology transfer into developing and least developed countries in order to promote the development of low carbon production to fight climate warming. Brazil has called for a Doha Declaration on Climate Change, applying the same logic to the global public good of climate mitigation as was applied in the area of medicines to human health, namely taking full advantage of the flexibility within TRIPS to grant compulsory licenses to critical climate-friendly technologies.

The Group of 77 and China has also called for compulsory licensing under the UNFCCC negotiations. Moreover, universities and public-private partnerships are beginning to voluntarily adopt alternative licensing solutions, such as including humanitarian or open licensing clauses within their licensing agreements. The list of ideas goes on: the US-China Clean Energy Forum has advanced the idea of establishing a joint intellectual property protection program, with insurance jointly written by US and Chinese entities (for example by the US Overseas Private Investment Corporation and by People’s Insurance Company of China), to lend credibility to IPR protection regimes.


Green TRIMS


Greening the Trade Related Investment Measures agreement (TRIMS) would constitute an option to renegotiate and re-activate it. Many developing countries experienced TRIMS as a useful mechanism allowing them to temporarily protect their own industries in select sectors until they were ready to drop these measures. A second generation TRIMS agreement could be negotiated which could allow developing countries time to protect infant industry in the sector of carbon reduction technology and hence it could make it easier for them to commit to GHG reduction targets.

Assessing such a re-use and negotiations of TRIMS could be guided by UNCTAD whose research on Foreign Direct Investment and developing country mandate would make it the appropriate international organisation to lead such an effort.

Applying green TRIMS could help developing countries learn how to apply and use green technology for climate change adaptation and mitigation. One of the common measures currently prohibited by the WTO TRIMS Agreement is ‘local content requirements’, a specific law or regulation committing foreign investors to purchase or procure locally a minimum threshold of goods and services. A reintroduction of TRIMS to support a new green TRIMS Agreement would ensure that green technology is produced fully or partially in the importing developing countries, either in commercial partnership with developed country patent holders or alone through their own abilities to innovate and create their own green technologies.


Green plurilateral PTA


A green three-sector Plurilateral Agreement is a comprehensive solution to fight climate warming and to reduce poverty. This solution would consist of negotiated trade-offs across three domains of the WTO framework agreement, namely:

Environment: green goods and green services putting trade liberalisation of goods (EGA) and services (TISA) on most favoured nation basis with exemptions for Developing and Least Developed Countries.

Energy: green goods and services relevant for supporting green energy, making ‘green’ commitments in GATT and GATS related to green energy);

Trade and development: making green commitments through Preferential Trade Agreements (PTAs) giving market access for green technology producers in developing countries to markets in developed and emerging countries; trade facilitation and capacity building to help Low-Income Developing Countries and LDCs to grow economically and reduce poverty within green growth parameters.


New thinking required


The notion of Global Public Goods and Public Common Goods needs to be revisited to accompany the newly adopted Sustainable Development Goals (SDGs). Besides, the tensions between Multilateral Environmental Agreements (MEAs) and the multilateral, plurilateral and bilateral trade and investment agreements hinders the goal of achieving low carbon investment and low carbon economic activities. The principle of mutual supportiveness suggests that each international regime should take into account the scope and legal ramification of other agreements and ensure that treaty regimes are complementary not contradictory.

In addition, recurring crises linked to finance, food, energy and climate change have fuelled collective forms of coping, producing and provisioning food and energy at affordable prices as part of Social and Solidarity Economy (SSE). A prominent feature of SSE is the possibility to craft new ways of producing and distributing food and other goods and services that are fairer for producers, healthier – and sometimes cheaper – for consumers, better for the planet and beneficial in terms of social or community cohesion.

The UN Inter-Agency Task Force on Social and Solidarity Economy considers that SSE holds considerable promise for addressing the economic, social and environmental objectives and integrated approaches inherent in the concept of sustainable development as defined by the SDG agenda. SSE has the potential to support the transition from informal economy to decent work; green the economy and society; promote local economic development; develop sustainable cities and human settlements; empower women’s well-being; ensure food security; promote universal health coverage; and provide transformative finance. SSE appears to be a promising new approach consistent with the concepts of Mutual Support and Global Public Goods.


A green approach


Aspiring to simultaneously achieve the COP21 goals, the SDG goals, as well as continued trade and economic growth on the basis of ‘business as usual’ approach, is simply an absurd undertaking. A greening of the WTO framework is needed to reduce barriers to the global trade of environmental goods and services and concomitantly make access to green technology possible and affordable for developing countries that have to cope with the negative consequences of climate change as do developed countries. However, the developing countries and particularly the LDCs are severely hampered by their scarce financial resources and lack of access to green technology.

In the public interest, giving developing countries concessions through green TRIPS, green TRIMs and a green tri-sector plurilateral should be linked to requesting developing countries to make Intended Nationally Determined Contributions (INDCs) commitments to effectively implement the Paris Agreement as fast as possible for the good of all countries and their citizens.

For more detailed reading on the suggestions developed in this article please refer to the author’s recent e-book titled Greening the WTO available at: http://feempress.feem.it/getpage.aspx?id=8350

 

About the author

Raymond-Saner

Prof Raymond Saner is Professor of International Relations & International Management at Sciences Po, Paris and University of Basle, Switzerland and Director at the Centre for Socio-Eco-Nomic Development.


Photo: Green planet. Credit: Olearys, flickr.com

This article was published in GREAT Insights Volume 5, Issue 2  (March/April 2016).

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Economic Transformation and TradeClimate changeWorld Trade Organisation (WTO)

External authors

Raymond Saner