Rhein on Energy and Climate

The failure of the 150 odd trade ministers from the WTO member countries, on July 28th, to wind up seven years of laborious negotiations throws a dark shadow on the increasing dysfunction of the international community.

Most commentators have focused on the negative impact on international trade, fearing rising protectionism and a blow to the confidence in the global economy.

These fears sideline the real issue that goes far beyond trade. We do not really have to worry about the future of international trade flows. We should rather get concerned about the rising volume of goods, from cheap toys to luxury goods and exotic fruit, being shipped around the globe and generating several hundred million tons of carbon dioxide emissions.

Never before in human history has international trade been so free from physical and regulatory barriers. Tariffs on industrial goods do rarely surpass 10 percent among major trade partners. Freight rates have declined massively thanks to the container revolution. No wonder that international trade has been growing at 4-6 percent annually. That is unsustainable; humanity could very well with 2-3 percent annual growth.

Looking back at these seven years of frustrating negotiations on “peak tariffs”, “special safeguards” for meat, vegetable oils or EU banana duties of $ 114 or 109 in 2016 etc., we should sharpen our sight to what is essential for humanity.

The Doha Round has essentially collapsed for three reasons:

  • The unprecedented complexity of the negotiations, with all issues being interlinked, even the most trivial ones concerning only a handful of countries.
  • The ever-rising political sensitivity of agriculture, for wealthy and poor countries alike. Food security overrides trade!
  • The naïve belief in simultaneously tackling trade and development issues and therefore having all 152 member countries at the negotiation table.

In the future, WTO should authorise groups of countries to wind up negotiations among them, while still respecting the “most favoured nation clause”.

In any case, there is no urgency for a new try. In 2009, the international community should focus all its energy on completing the ongoing negotiations for an effective international climate policy framework:

  • Unlike the Doha Round, the Climate Negotiations must succeed. We cannot afford their failure.
  • To that end the heads of government have to get involved at an early stage into these negotiations. The G8 + G5 meeting at Hokkaido in July 2008 was a start, but not enough.
  • The G13 countries, which bear the main responsibility for climate change, have to negotiate among them the key elements of the future climate pact. In a second stage, the G13 should – as a group – negotiate the commitments to be taken by minor emitting countries like South Korea, Argentina, Switzerland, Ukraine etc. The majority of poor countries, whose emissions have no impact on the climate should, continue to benefit from a “dispense”.
  • The climate negotiations should focus on climate mitigation and not complicate the issue by also tackling adaptation to climate change. That might be done by a special conference in 2010-11.
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