Climate Change, International Trade, and Response Measures: Options for Mitigating Climate Change without Harming Developing Country Economies

The Parties to the U.N. Framework Convention on Climate Change (UNFCCC) recognize the need for developed countries to reduce emissions but that these measures — known as response measures — could negatively impact developing economies and impede sustainable development efforts. Developing country Parties have consistently argued that implementation of unilateral response measures taken by developed countries will hinder economic development in developing countries, especially if such measures affect international trade. For example, a carbon tax on aviation fuels could raise airfare just enough to reduce the number of tourists willing to travel to remote destinations, and biofuel production mandates may increase the cost of agricultural imports. The UNFCCC requires all Parties to “give full consideration to what actions are necessary . . . to meet the specific needs and concerns of developing country Parties arising from . . . the impact of the implementation of response measures.” The Parties, however, have made no progress on addressing response measures because developed countries will not agree to an outright ban on unilateral response measures, as many developed countries want. Indeed, developed countries must adopt response measures if they are to mitigate their greenhouse gas emissions, but some of these measures will cause the price of carbon to rise and affect economies worldwide. This Article proposes four options for reframing the response measures debate based on ideas found in international trade law, such as the notification and consultation approach of the Agreement on Technical Barriers to Trade and an approach that exempts certain countries or products from “border carbon adjustments.” Each of these approaches has flaws, but each also has significant benefits and all may encourage all Parties to engage constructively in the response measures debate. A positive outcome to the response measures debate may encourage greater mitigation ambition; developed countries will understand that certain types of response measures are permissible (and perhaps impermissible), and developing countries will have assurances that the most economically damaging response measures will be limited or prohibited.