Event Title
Conference on China and Global Climate Change : Reconciling International Fairness and Protection of the Atmospheric Commons
Location
AM308, Lingnan University
Start Date
18-6-2009 2:00 PM
End Date
18-6-2009 3:30 PM
Language
English
Description
Current U.S. “cap & trade” federal legislative proposals seek to maintain competitiveness of U.S. industry by requiring certain importers to obtain greenhouse gas (GHG) emissions permits equivalent to the permits required from U.S. producers. Currently neither U.S. nor Chinese producers are subject to such a rule. If China does not adopt what the U.S. views as a “comparable” GHG emissions permit system, it is widely expected that the U.S. Congress will require GHG emissions permit for imports. It is also widely expected that China will challenge U.S. a GHG emissions permit requirement applied to Chinese exports as in violation of WTO trade treaty obligations.
This paper examines the expected contents of U.S. competitiveness legislation in relation to WTO treaty law, and assesses prospects for WTO constraints on the U.S. GHG emissions permit system applied to Chinese exports. It also assesses the prospects for utilizing a Chinese threat of WTO legal action to bridge the gap between U.S. and Chinese positions in international climate negotiations. Under what circumstances might China adopt a GHG emissions permit system that would be accepted by the U.S. as “comparable” to the U.S. system?
Might a U.S.-China bargain include credible U.S. commitments to provide technology and technical assistance sufficient to materially reduce China’s GHG emissions? Might the Clean Development Mechanism (CDM) be revised and expanded in such a way as to substantially increase the flow of CDM revenues to China? Might the U.S. and China join together in coordinated efforts to solve technical issues hampering efforts to develop “clean coal”, environment-friendly biofuels, and efficient means of long-distance energy transmission?
In sum, might moderation, cooperation, and agreement be possible given increased recognition of the cataclysm threatened by uncontrolled GHG emissions, together with the leverage provided by a credible threat of potentially successful WTO litigation? In the United States, current legislative proposals for a “cap & trade” system seek to maintain the competitiveness of U.S. industry through two basic procedures relating to GHG emissions. First, the principal draft bill pending in the U.S. Congress (American Clean Energy and Security Act [ACES], 2009) would cap overall domestic GHG emissions and allocate greenhouse gas (GHG) “emission allowances” to certain carbon intensive and trade sensitive industries without charge. In this paper I will call such emission permits “domestic emission allowances”. Second, in certain circumstances, the draft bill would require importers to obtain “international emission allowances” equivalent to the domestic emission allowances required from U.S. GHG emitters. Whereas domestic emission allowances account for actual GHG emissions resulting from production and process actions in the United States, international emission allowances account for GHG emissions assumed to have resulted from production and process actions occurring abroad with respect to certain products imported into the United States.
Currently neither U.S. GHG emitters nor Chinese exporters are subject to emissions allowance requirements. However, if China or some other major exporter does not adopt what the U.S. views as a “comparable” GHG emissions allowance system, it is widely expected that the U.S. Congress will require some form of GHG emissions permit for imports of certain carbon intensive goods. It is also widely expected that China or some other exporter will challenge U.S. a GHG emissions permit requirement as applied to their exports as in violation of WTO trade treaty obligations.
This paper examines the proposed contents of U.S. competitiveness provisions in relation to WTO treaty law, and assesses prospects for WTO constraints on the proposed U.S. GHG emissions permit system. With this in mind, the paper assesses the prospects for utilizing threats of WTO legal action to bridge the gap between U.S. and Chinese positions in bilateral or international climate negotiations.
The following are among the issues potentially resolvable through such a strategy. Under what circumstances might China adopt a GHG emissions permit system that would be accepted by the U.S. as “comparable” to the U.S. system? Might a U.S.-China bargain include credible U.S. commitments to provide technology and technical assistance sufficient to materially reduce China’s GHG emissions? Might the Clean Development Mechanism (CDM) be revised and expanded in such a way as to substantially increase the flow of technology and of CDM revenues to China? Might the U.S. and China join together in coordinated efforts to solve technical issues hampering such carbon emissions mitigation efforts as programs to develop “clean coal” power plants, environment- friendly biofuels, or efficient means of long-distance energy transmission?
This discussion has three parts. The first is a brief description of salient provisions of “ACES”, the “American Clean Energy and Security Act of 2009”, which is the leading climate bill pending in the U.S. Congress (ACES, 2009). At this writing, ACES has been adopted as amended by the Committee on Energy and Commerce, which is the lead House committee on energy legislation, and is pending before seven other House committees, chief among which is the House Ways and Means Committee. As the House committee primarily responsible for revenue legislation, Ways and Means will examine and perhaps amend provisions concerning both emitters’ rebates and importers’ emissions allowances, which are discussed in the first part of this paper.
The second part of the paper briefly examines key WTO treaty provisions to assess their potential application in WTO litigation concerning the conformity of ACES with U.S. treaty obligations. The final part will suggest that the dynamics of China-U.S. climate relations may be materially affected by the availability of a WTO forum for interpreting WTO treaty provisions and applying them to climate measures such as ACES.
The key word here is “dynamics”. With the election of Barack Obama and the appointment of his “dream team” of energy and climate officials, the U.S. clearly expects to play a leadership role in international efforts to restrict global greenhouse gas emissions. Having surpassed the U.S. as the world’s largest source of current greenhouse gas emissions, and considering its increasing need for efficient energy resources, China is similarly poised for leadership. It may well be that the success or failure of the current international climate negotiations will depend upon the ability of China and the United States to reach a common understanding and a joint approach to the design of a post- Kyoto GHG emissions control system. Hence the inquiry here addresses the dynamics of the China-U.S. climate negotiations – and the important role that might be played by WTO treaty obligations and the WTO judicial process.
Document Type
Presentation
Recommended Citation
Partan, D. (2009). WTO law as leverage: An inquiry into the dynamics of climate negotiations between China and the United States. In China and global climate change: Proceedings of the conference held at Lingnan University, Hong Kong, 18-19 June 2009 (pp. 191-205). Centre for Asian Pacific Studies and the Environmental Studies Programme, Lingnan University, Hong Kong.
Included in
WTO law as leverage : an inquiry into the dynamics of climate negotiations between China and the United States
AM308, Lingnan University
Current U.S. “cap & trade” federal legislative proposals seek to maintain competitiveness of U.S. industry by requiring certain importers to obtain greenhouse gas (GHG) emissions permits equivalent to the permits required from U.S. producers. Currently neither U.S. nor Chinese producers are subject to such a rule. If China does not adopt what the U.S. views as a “comparable” GHG emissions permit system, it is widely expected that the U.S. Congress will require GHG emissions permit for imports. It is also widely expected that China will challenge U.S. a GHG emissions permit requirement applied to Chinese exports as in violation of WTO trade treaty obligations.
This paper examines the expected contents of U.S. competitiveness legislation in relation to WTO treaty law, and assesses prospects for WTO constraints on the U.S. GHG emissions permit system applied to Chinese exports. It also assesses the prospects for utilizing a Chinese threat of WTO legal action to bridge the gap between U.S. and Chinese positions in international climate negotiations. Under what circumstances might China adopt a GHG emissions permit system that would be accepted by the U.S. as “comparable” to the U.S. system?
Might a U.S.-China bargain include credible U.S. commitments to provide technology and technical assistance sufficient to materially reduce China’s GHG emissions? Might the Clean Development Mechanism (CDM) be revised and expanded in such a way as to substantially increase the flow of CDM revenues to China? Might the U.S. and China join together in coordinated efforts to solve technical issues hampering efforts to develop “clean coal”, environment-friendly biofuels, and efficient means of long-distance energy transmission?
In sum, might moderation, cooperation, and agreement be possible given increased recognition of the cataclysm threatened by uncontrolled GHG emissions, together with the leverage provided by a credible threat of potentially successful WTO litigation? In the United States, current legislative proposals for a “cap & trade” system seek to maintain the competitiveness of U.S. industry through two basic procedures relating to GHG emissions. First, the principal draft bill pending in the U.S. Congress (American Clean Energy and Security Act [ACES], 2009) would cap overall domestic GHG emissions and allocate greenhouse gas (GHG) “emission allowances” to certain carbon intensive and trade sensitive industries without charge. In this paper I will call such emission permits “domestic emission allowances”. Second, in certain circumstances, the draft bill would require importers to obtain “international emission allowances” equivalent to the domestic emission allowances required from U.S. GHG emitters. Whereas domestic emission allowances account for actual GHG emissions resulting from production and process actions in the United States, international emission allowances account for GHG emissions assumed to have resulted from production and process actions occurring abroad with respect to certain products imported into the United States.
Currently neither U.S. GHG emitters nor Chinese exporters are subject to emissions allowance requirements. However, if China or some other major exporter does not adopt what the U.S. views as a “comparable” GHG emissions allowance system, it is widely expected that the U.S. Congress will require some form of GHG emissions permit for imports of certain carbon intensive goods. It is also widely expected that China or some other exporter will challenge U.S. a GHG emissions permit requirement as applied to their exports as in violation of WTO trade treaty obligations.
This paper examines the proposed contents of U.S. competitiveness provisions in relation to WTO treaty law, and assesses prospects for WTO constraints on the proposed U.S. GHG emissions permit system. With this in mind, the paper assesses the prospects for utilizing threats of WTO legal action to bridge the gap between U.S. and Chinese positions in bilateral or international climate negotiations.
The following are among the issues potentially resolvable through such a strategy. Under what circumstances might China adopt a GHG emissions permit system that would be accepted by the U.S. as “comparable” to the U.S. system? Might a U.S.-China bargain include credible U.S. commitments to provide technology and technical assistance sufficient to materially reduce China’s GHG emissions? Might the Clean Development Mechanism (CDM) be revised and expanded in such a way as to substantially increase the flow of technology and of CDM revenues to China? Might the U.S. and China join together in coordinated efforts to solve technical issues hampering such carbon emissions mitigation efforts as programs to develop “clean coal” power plants, environment- friendly biofuels, or efficient means of long-distance energy transmission?
This discussion has three parts. The first is a brief description of salient provisions of “ACES”, the “American Clean Energy and Security Act of 2009”, which is the leading climate bill pending in the U.S. Congress (ACES, 2009). At this writing, ACES has been adopted as amended by the Committee on Energy and Commerce, which is the lead House committee on energy legislation, and is pending before seven other House committees, chief among which is the House Ways and Means Committee. As the House committee primarily responsible for revenue legislation, Ways and Means will examine and perhaps amend provisions concerning both emitters’ rebates and importers’ emissions allowances, which are discussed in the first part of this paper.
The second part of the paper briefly examines key WTO treaty provisions to assess their potential application in WTO litigation concerning the conformity of ACES with U.S. treaty obligations. The final part will suggest that the dynamics of China-U.S. climate relations may be materially affected by the availability of a WTO forum for interpreting WTO treaty provisions and applying them to climate measures such as ACES.
The key word here is “dynamics”. With the election of Barack Obama and the appointment of his “dream team” of energy and climate officials, the U.S. clearly expects to play a leadership role in international efforts to restrict global greenhouse gas emissions. Having surpassed the U.S. as the world’s largest source of current greenhouse gas emissions, and considering its increasing need for efficient energy resources, China is similarly poised for leadership. It may well be that the success or failure of the current international climate negotiations will depend upon the ability of China and the United States to reach a common understanding and a joint approach to the design of a post- Kyoto GHG emissions control system. Hence the inquiry here addresses the dynamics of the China-U.S. climate negotiations – and the important role that might be played by WTO treaty obligations and the WTO judicial process.