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Climate Clubs
Carrots, Sticks and More
Kasturi Das
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WTO-incompatible measure will ultimately end up under the WTO scanner would
depend on a host of political, diplomatic
and economic factors. As observed by Simon Lester, (t)he WTO dispute system
can never deal with all violations of
obligations. Many cases will never be
brought; some cases will be settled
before there is a ruling; some rulings
will be negotiated away and some
rulings will be ignored.6 The Montreal
Protocol on substances that deplete the
ozone layer, negotiated in 1987, is a case
in point. It created room for the parties
to the protocol to ban trade in ozone-depleting substance (ODS) with non-parties
unless the non-parties adopted comparable measures. This provision has
always been a cause of anxiety (Knox
(2004) as it is likely to violate the GATT
rules on prohibition of quantitative
restrictions on trade in products, as well
as the non-discrimination principles.
Such uncertainties notwithstanding, the
fact remains that till date no country has
brought a WTO dispute against the
Montreal Protocol. In fact, of the 250
odd multilateral environmental agreements (MEA) currently in existence, over
20 incorporate trade measures to
achieve their goals. Yet till date there
has not been a single WTO dispute pertaining to any of the MEAs. Rather the
WTO members have been discussing
ways to maintain a harmonious coexistence between the WTO rules and the
specific trade obligations in various
MEAs under the Doha Round.
Notably, apart from the climate clubs
context, the BCA has also been contemplated as a unilateral trade measure by
some developed countries (for example,
the European Union (EU) and the US) to
tackle the problems of competitiveness
and carbon leakage pertaining to their
domestic policies on pricing carbon.7
While the jury is still out as to how big
the problem of carbon leakage actually
is when judged in light of the existing
empirical evidence,8 policy measures to
deal with competitiveness concerns of
domestic industries, particularly the
energy-intensive and trade-exposed ones,
covered under any carbon pricing scheme
often turn out to be a political compulsion that a country may not be able to
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COMMENTARY
coupled with side payments made to developing countries like China and India
in the form of financial support and
technology transfer. According to Barrett (2003), carrots, or side payments,
can promote cooperation only if the positions of the countries involved are sufficiently asymmetric, and will likely
work only when they are coupled with
effective sticks, such as trade sanctions.
Finding the Balance
However, since each international environmental problem is distinct, finding
the correct balance will probably mean
a different combination of carrots and
sticks than what was written in the
Montreal Protocol. The plethora of factors that China and India faced in making the decision to ratify the Montreal
Protocol lend insight into how difficult it
may be to achieve this balance (Pfluger
2010). Given the sheer magnitude and
multiple dimensions and complexities
involved in the climate change problem,
achieving such a balance at the
multilateral level would be far more
difficult compared to Montreal Protocol.
Climate clubs involving smaller number
of countries may indeed be easier to
handle in this respect. To the extent
climate actions by certain developing
countries are constrained by availability
of funds and appropriate technology at
affordable prices, and given that multilateral efforts towards ensuring financial support and technology transfer for
such countries have been far from adequate till date, it may be worth exploring
further whether club approaches could
add more value by creating carrots in
the form of finance, technology transfer
and other capacity building support for
developing countries, over and above
what may be achievable multilaterally
under the UNFCCC.
It needs to be mentioned here that
plurilateral approaches are not entirely
new in the climate context. In fact, the
past couple of decades have been
witness to a plethora of bilateral and
plurilateral initiatives (such as, the Major
Economies Forum; the Climate and
Clean Air Coalition; etc) giving rise to a
decentralised regime complex (Keohane and Victor 2011) or polycentric
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References
Barrett, S (2003): Environment and Statecraft: The
Strategy of Environmental Treaty Making, New
York, NY: Oxford University Press.
Bodansky, Daniel (2009): Legal Form of a New
Climate Agreement: Avenues and Options,
Pew Center on Global Climate Change, Arlington, VA.
Brewer, Thomas L (2014): Climate Change Clubs:
Illustrative Issues from International Maritime
Shipping, The Way Forward in International
Climate Policy: Key Issues and New Ideas,
Heleen de Coninck, Richard Lorch and Ambuj
Sagar (eds), Climate Strategies and CDKN.
Esty, Daniel C (1994): Greening the GATT: Trade,
Environment, and the Future.
Grubb, Michael, Thomas L Brewer, Misato Sato,
Robert Heilmayr, Dora Fazekas (2009): Climate
Village Society
Edited by SURINDER S JODHKA
The village is an important idea in the history of post-Independence India. A collection
of articles that covers various features of village society: caste and community, land
and labour, migration, discrimination and use of common property resources.
Pp x + 252 Rs 325
ISBN 978-81-250-4603-5
2012
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