by Daniel M. Firger
Note: a longer version of this article first appeared in BNA’s Daily Environment Report (No. 133, 12 July 2011).
Climate change is poised to become the next big thing in international trade law, but not for the reason most experts have long predicted. The much-ballyhooed ‘‘border carbon adjustment,’’ a controversial tariff imposed on imports to level the playing field between trading partners with strong climate regulations and those without, has yet to be employed anywhere in the world.
Meanwhile, clean energy subsidies have already yielded two high-profile World Trade Organization (WTO) disputes — one between Japan and Canada and the other between the U.S. and China — the resolution of which likely will shape important features of international climate policy and the world trading system for years to come. Contrary to conventional wisdom, then, it is not climate-related protectionism but rather governments’ support for climate-friendly technology that has come into conflict with international trade law rules.
This article, published on July 12 in BNA’s Daily Environment Report and on July 11 in its World Climate Change Report, identifies the reasons why protectionism has yielded to subsidies as the primary climate change battleground at the WTO, and examines the key issues in two recently initiated trade disputes with potentially enormous ramifications for the future of clean energy.