1. Trade Interactions of Consumption-related Climate Policy Instruments
Carbon-CAP stakeholder workshop, 11 November 2015, Beijing, China
Sonja Hawkins, International Centre for Trade and Sustainable Development (ICTSD)
Specific issue: interactions b/w instruments and intl. trade
GLOBAL PLATFORM ON CLIMATE CHANGE, TRADE & SUSTAINABLE ENERGY

2. ¼ of emissions embedded in international trade
Source: Copyright Global Carbon Atlas,

3. China and EU emissions in 2012
MtCO₂
Data from Global Carbon Atlas,

4. Consumption-based climate policy instruments
Address embedded carbon and role of consumption as a driver of emissions
Responsibility for extra-territorial emissions
Opportunity for cooperation between producing and consuming countries
Consider interactions with trade

5. Trade and climate change
UNFCCC Art. 3.5: “Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.” Preamble Marrakesh Agreement (WTO): “…while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment…”

6. Spillover effects on trade
Trade dimensions
Trade Law
- A lot of space
- Does not trump climate
- Respect key principles
Indirect (trade flows)
Spillover effects on trade
Direct (market access / equal treatment)
Positive or negative

7. Indirect trade impacts
All successful instruments
Substitution/ Demand reduction
Changes in demand patterns
Changes in trade flows
Some instruments would only cause indirect trade impacts. Ex:
Waste and recycling instruments
Infrastructure improvements
Information campaigns
Benchmarked carbon-intensive charge

8. Direct trade impacts Some instruments Market access / Discrimination
Trade distortions or opportunities
Some instruments could also cause direct trade impacts. Ex:
Regulatory standards / Carbon labelling
Voluntary supply chain requirements
Carbon embodied charge
Subsidies / Product tax incentives / Preferential finance terms
Government procurement / Approved technology lists
Product bans

9. Concluding remarks Consider potential trade impacts Remember
Careful design and implementation can limit adverse direct trade impacts
But do not rule out promising instruments
Remember
Not designed to specifically target imports, also affect domestic products
Not only negative, can also create trade opportunities
Opportunity for cooperation

10. Thank you for your attention
Sonja Hawkins (ICTSD)