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The Tales of Two Dichotomy: How Environment and Trade Find Their Common Ground

Contemporary global challenges such as climate change mitigation resembles Shakespearean justice, where human activities that disrupts the nature order of the world, nature revenges by making appearances consists of ‘cataracts and hurricanes’, ‘sulphurous’ fires’ and ‘all-shaking thunder’ [1], and human must endeavour through active actions to restore the nature order. The celebrated capitalist prosperity in the last millennium accounted for positive economical growth worldwide, also accelerated global environmental degradation, declining of ocean fisheries, overexploitation of common resources and depletion in biodiversity. As the world counts down to the Copenhagen UN summit in less than a month time, with the aims to draw up a treaty to succeed the 1997 Kyoto Protocol,[2] observers believe the summit would only produce a framework for future action.[3] The conflict and tension between trade and environment exacerbated by climate change, reflect the need to examine the two dichotomy through new lens, and governance must be engaged at multilevel to reflect and respond to the complicity of climate change. As climate change exerts its impacts on the global economics through varies of ways, emissions and impacts occur at multiple levels simultaneously. Linear approaches in confining climate change as a trade-related environmental issue and place blinded reliance in international institution such as the World Trade Organization (WTO) or international treaties to target the problems are neither inadequate nor sufficient to halt the global impacts of anthropogenic climate change.

The fluidity of capitals that made possible by globalisation, global economic prosperity also accelerated the rate of environmental degradation. Past experiences informs that political liberalization, economic development and environmental protection go hand in hand.[4] The assumption that environmental-friendly trade measures would necessitate an inhibition on trade liberalization is misconstrued. Rather, the contemporary concern for climate change arises because the past exponential trade growth did not take into consideration of environmental cost, hence the past global economic growth partially attributable to the cause of climate change. However, to deduct that environmental protection would halt trade liberalization is a over-simplification of the matter, rather, as the past experiences illustrates, how to conduct international trade in a sustainable manner, and to facilitate technology transfer between the North and South through a collective action, should be the centrepieces of climate change debate.

I . International Trade Regime vs International Environmental Regime

In light of contemporary concern of climate change, trade policy will have climate ramifications just as climate policy will have implication for trade regimes. International trade and climate regimes though operate with different mandates, they share common features such as promotion of greater economic efficiency to enhance public welfare, both recognise economy and environmental linkage, and both regimes are forward-looking in terms of their policy implementation. Hence, despite their fundamental different institutional structure, the trade and climate regime nevertheless bear some similarities, which might be advanced to promote common ground.

1. Functional Comparisons

International environmental regimes are known to lack concrete enforcement mechanisms and allow state-actors the flexibility to adopt a broad range of suitable instruments to combat global warming. On the other hand, the WTO regulate any environmental measures adopted by state-actors must be WTO-consistent, and thus a limited environmental approaches are permissible under the WTO[5]. Thus the restrictions imposed by the WTO on state-actors are more confined and rigid then the international environmental regimes. Moreover, because the neo-liberalism embedded in the WTO agreement and retaliation is permissible under the WTO, as it is known to have the strongest compliance system of any global organization today, the Dispute Settlement Understanding (DSU).[6] The WTO should be deemed as an international institution responsive to correct government failures, if a state-actor has implemented a policy distortive of trade liberalization and deemed as protectionist.[7] In other words, the trade regime seeks to disable economic instruments at the national level, and by allowing trade sanction to be imposed on the violated party, which means that a state-actor would immediately feel the impacts of economic sanction on its domestic market. Whereas the international environmental regime is driven by the need to correct market failure, and aspire to change the behaviour of each state-actors through behavioural incentives.

1. The danger of Boxing the Law

Nevertheless, the two dichotomy with distinguish aims and motivated by different goals does not mean the two are incompatible with each other, even though the two promote different and distinct values. To deem the WTO as strictly an economic-driven institution, and thus must treat any dispute with environmental concerns with trade-imperative is a constrictive view of the potential functions the WTO can play in combating the global warming. In reality, trade liberalization is possible and obtainable is because the WTO creates a “space of engagement”[8] that allows state-actor to promote and advance its own economical interest, thus brining economic incentives and lessens domestic resistance, where trade liberalization can occurs at different speed for each state-actor depending on its domestic context. In contrast, to combat global warming, collective actions from state-actors are essential and inter-governmental cooperation is necessary to lessen and halt the impacts of climate change. Any non-participation from a state-actor potentially aggravates and harms the collective action, even more so when state-actor places its national interests to secure energy access and resources to sustain the growth and economic welfare[9] as top priority, thus resulting in a dysfunctional climate regime.

To halt the cascading effects of climate change, where it alters the living conditions for all earth inhabitants, and to compartmentalise an occurring natural phenomenon as a trade issue, and therefore subject to the discipline of trade regime or vice versa reflects the fallible tendency of human nature to compartmentalise and thus underestimate the magnitude of climate change problem. Indeed, the WTO as a trade institution serves as a functional example as how to facilitate inter-governmental corporations, however, it does not mean that because the compliance system of the WTO regime can exert political and economical pressures on a non-compliant state-actor, then the WTO regime should serve as a plausible forum to combat climate change. As this would implicitly recognise that trade priority exceeds environmental concerns, thus any environmental-related trade measures must be in compliance with the WTO rules. The trade-centric thinking would misplace the urgent need to address the consequences of climate change, distort the big picture, and limit the uses of plausible and innovative environmental tools, which could be instrumental in combating climate change.

Nevertheless, the lesson from the WTO regime highlights the political reality at the international realm where state-actors would tend to act to promote and advance its national interests. The dysfunctional state of international environmental regime must then take into account of this political constrain to advance its agenda. The WTO regime needs to be approached with new light, such as the initiative taken by the European Union (EU) to reinforce its climate change agendas with trade policies to ensure the spread of green goods, services, and technologies around the world.[10] By using trade policies consistent with the WTO rules to advance its environmental agenda nevertheless is a compromised but feasible route. As reliance in international environmental regime to promote common environmental values must take on the risk of the inadequacies of enforcement mechanism such as the Kyoto Protocol, which detracts its credibility as a functional regime.

1. The EU Approach and Sustainability Impact Assessments

The Lisbon treaty signed by the Heads of State or Government of the 27 Member States in Lisbon on 13 December 2007, explicitly recognise the urgent need to address climate change, and the first EU treaty to make specific reference to energy with aims to ensure: (1) The functioning of the energy market; (2) Security of Supply; (3) Promote energy efficiency and energy saving; (4) Promote the development of new and renewable forms of energy; (5) Promote the interconnection of energy networks. Moreover, the adoption of the Charter of Fundamental Rights makes “a high level of environmental protection” a fundamental right of EU citizens, and thus overcome the classical division between trade and environment[11]. The Lisbon Treaty is remarkable in several ways; because firstly the economical-driven integration of 27 different state-entities is united and has a coordinated voice and specific competence to promote international action again st climate change.[12] The Lisbon Treaty demonstrates that environmental protection can coexist with economic goals where mitigation policies can be utilised to provide economic co-benefits and create regional opportunities.

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Secondly, in conformity of its Charter, the EU conducts Trade Sustainability Impact Assessments that study the likely impacts of economic, social and environment as part of its EU trade negotiations, through studies conducted via independent external consultants. Thus, trade liberalisation is conducted in conjunction with social, health, and environmental assessments, where any impacts affected by the trade agreement on both sides are take into consideration.[13] The holistic approach taken by the EU disperse the classical division between trade and environment, and more importantly, the studies conducted by external consultants are published and available in the public domain, subject to public securitize and criticisms. The EU negotiators are guided by the assessment in assessing the best possible outcome of a trade negotiation, where they could formulate possible policy measures to accompany the trade agreement, to ensure trade liberalization is supportive of environmental sustainability.

Thus, the notion that trade and climate regimes are incompatible with each other is misconstrued, the fear that environmental friendly measures are trade restrictive obscures and limits the potential that trade can be use to advance, facilitate and engage countries to combat climate change. Moreover, as the EU’s sustainability impact assessments illustrates, the primacy should be place upon trade measures that are supportive of environmental sustainability, rather than formulating environmental policies that are in compliance of the WTO rules. By taking into consideration of the overall impacts of trade measures, rather than compartmentalising the matter as strictly a trade issue and thus excluding its likely environmental impacts, is taking a holistic approach to tackle the climate change problem. Moreover, it should be bear in mind that WTO law is not immutable, if WTO rules cannot reflect the contemporary needs of its Members, the rules can be altered and challenged, even though it is unlikely at present.

III. Engagement at Multilevel Governance

In order to promote climate change mandate, reliance on the WTO as a forum to facilitate environmental dialogue is highly improbable, nor is the reliance on the WTO to alter its rules to reflect the current climate change concern a probable route. Climate change is a multifaceted global problem that demands collective action and the fluidity of carbons that penetrate the global economy and manifest its impacts in specific ways in different geographical locations, illustrate the need to engage state-actors at multilevel governance: international, regional, national, and local. In other words, to combat climate change, every action from individual, local, state, national, and international are accountable. Law, therefore must find a way to be weaved among those levels of governance to exert both vertical and horizontal pressure and may impact how policy are formulated at international level, and create space to facilitate policy dialogues. Both top-down and bottom-approaches should occur simultaneously, simple reliance on international trade or climate regime would be an inadequate response to tackle climate change. The transnational character of climate change challenges the traditional perception of two distinct dichotomy, trade and environment, as well as confronting us how we box law, and human tendency to compartmentalise matter into distinct academic disciplines, and thus become myopic of the real issue in the process.

1. Conclusion

The multilevel governance in a world of economic interdependence may evolve as global warming exacerbates, and how law and policy is structured would be pivotal in the ongoing climate change dialogue. Climate change reinforces the need to seek new and better structure of governance and to refine the relationship between trade and environmental regime, as well as the need to approach issues with holistic and interdisciplinary thinking.

[1] 1. William Shakespeare, King Lear

[2] China unveils emissions targets ahead of Copenhagen http://news.bbc.co.uk/2/hi/asia-pacific/8380106.stm

[3] Obama to offer 17% US emissions cut at Copenhagen Summit http://www.pbs.org/newshour/bb/environment/july-dec09/climate1_11-25.html

[4]

[5] Class Lecture, Prof. Wen-chen Shih

[6] Ibid

[7] Steve Charnovitz , Trade And Climate: Potential Conflicts And Synergies, http://www.pewclimate.org/docUploads/Beyond_Kyoto_Trade.pdf

[8] Kevin R. Cox, Spaces of Dependence, Spaces of Engagement and the Politics of Scale, or: Looking for Local Politics, 17 POL. GEOGRAPHY 1 (1998)

[9] Thomas Cottier, Multilayered Governance, Pluralism, and Moral Conflict, 16 Ind. J. Global Legal Stud. 647

[10] http://ec.europa.eu/trade/wider-agenda/environment/climate-change/

[11] The Charter of Fundamental Human Rights

[12] Article 191 of the TFEU provides "..to promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change".

[13] Sustainability impact assessments, http://ec.europa.eu/trade/wider-agenda/development/sustainability-impact-assessments/