Workshop on Trade and climate policy in 2018 and beyond. How to get the incentives right?
In this one-day workshop we discussed options to align trade and climate policies and measures to achieve the strategic goal of a mutually enforcing approach in the EU. This include particular policy tools for implementing the current EU NDC, with a focus of creating a reliable investment environment for EU companies. The linkage between both policy domains is most evident in basic materials sectors like steel or aluminum. These sectors account for 25% of global greenhouse gas emissions and a large share of WTO complaints. While policymakers and some industrial actors are starting to take the need for large scale emission reductions to achieve 2050 climate targets seriously, we witness political tensions in trade relations and the need for supporting the Paris Agreement by exploring synergies across policy fields.
This raises the question, whether in the mid- to long-term, the role of trade and of trade policies in reducing emissions will increase. In the short run, a key question raised is whether retaliatory trade policy measures could be structured to deliver climate benefits and thus gain legitimacy.
Also, the nationally determined contributions (NDCs) indirectly shift parts of the responsibility from producers to consumers. This has implications for trade cooperation as new product standards could be an option as well as consumption charges to complement upstream emission trading schemes. A further element for discussion in the toolbox to enable effective carbon prices and address carbon leakage is the inclusion of imports in emissions trading schemes.
With this one day workshop, we created the space for an open discussion under Chatham House Rule. We brought together perspectives from academic, policy making and stakeholder sides with the aim is to better understand the different elements of climate measures and trade measures and their interactions.