By Peter M. Robinson
Apart from their seemingly mind-numbing complexity, the UN climate negotiations that took place in Bali in December, where nations began to map out a successor agreement to the Kyoto Protocol, would seem to have little in common with the Doha round of global trade talks. Indeed, they are rarely mentioned in the same breath.
This is disappointing. Freer trade and progress on climate change are both essential to sustainable development. International trade is a proven path to economic growth and technological advancement: as countries trade more, they grow richer and have more resources to devote to environmental protection. So both rich and poor countries have a clear stake in finding workable, mutually reinforcing resolutions to the Doha and Bali talks.
Free trade and environmental protection go hand in hand
What’s more, despite repeated predictions of imminent collapse, the Doha round is actually showing some signs of progress. Reaching a comprehensive agreement that lowers barriers to trade in both goods and services could positively influence the course of global climate policy. If both the Doha and Bali negotiations are successful, the result would be greater than the sum of the parts.
Conversely, if trade and climate are set against each another, the results would hamper economic growth, fuel protectionism and complicate the already difficult task of coming to a global consensus on protecting the climate. Even now, too many parties seem to want to use trade as a “hammer” to force countries to follow a specific path on reducing emissions of greenhouse gases. We must resist this temptation.
Nearly everyone involved in the climate talks agrees that innovative technologies are indispensable in both mitigating and adapting to climate change. China’s greenhouse gas emissions are expected to surpass those of the United States this year. It’s clear that the commercialization and dissemination of environmentally friendly technologies in rapidly developing countries like China and India is especially critical.
Needed: a technological pipeline
Most poorer nations understandably view the pursuit of economic growth as their right, and it is unlikely that they will agree to anything that places serious obstacles in their way. So far, they have resisted binding curbs on emissions, feeling this would constrain growth. But there already exist many cleaner-energy technologies and practices that could permit these countries to continue to pursue growth while contributing to a global reduction in emissions.
Many see a global price for carbon, set through an “artificial” market along the lines of European-style emissions trading, as the main catalyst for climate-friendly investment and technology. But far more important is freeing up the power of traditional markets to deliver green technologies where they are needed most.
A recent World Bank report found that removing tariffs and non-tariff barriers in 18 of the high-emitting developing countries for four basic clean energy technologies (wind, solar, clean coal and efficient lighting) could lower the costs of these technologies by some 13 percent, which could help reduce emissions significantly. What’s more, it is clear that these reductions could be further augmented through the application of better management practices and technical know-how, both of which tend to follow in trade’s wake.
A huge market for firms
Making sure climate and trade regimes are harmonious and mutually reinforcing would also open up vast opportunities for many multinational firms. The world market for environmental technologies is valued at $800 billion per year and growing. GE, United Technologies and many others are innovating, and they are looking to market and utilize their climate-friendly technologies in India, China, Brazil and other rapidly growing markets.
So more open trade could be what bridges the rich-poor divide on global warming and brings the world together, generating economic prosperity while protecting the climate.
To be politically viable, climate solutions must speak to real-world needs, including economic growth. They must be seen to deliver benefits today to people in both rich and poor countries. And they need to be in line with other political and market realities.
Among these realities is the desperate need to roll back tariffs on environmental goods and services, and halting calls for protectionist policies in the name of climate change. Completing the Doha round would set us on this path.
For more information or to get involved, please contact USCIB’s Norine Kennedy (212-703-5052, email@example.com).
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