Climate and Trade Policy
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Climate and Trade Policy

Bottom-up Approaches Towards Global Agreement

Edited by Carlo Carraro and Christian Egenhofer

The difficulty of achieving and implementing a global climate change agreement has stimulated a wide range of policy proposals designed to favour the participation of a large number of countries in a global cooperative effort to control greenhouse gas emissions. This significant book analyses the viability of controlling climate change through a set of regional or sub-global climate agreements rather than via a global treaty.
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Chapter 4: Trade, the Environment and Climate Change: Multilateral versus Regional Agreements

David Kernohan and Enrica De Cian


David Kernohan and Enrica De Cian Trade liberalization and climate change share common themes. They are both global challenges calling for a global solution, which will require multilateral cooperation. Climate change, associated with the international externality of greenhouse gas (GHG) emissions, is the first case of a truly global environmental problem and therefore can be thought of as a prototype transborder global threat. From the establishment of the GATT in 1947, global free trade has been promoted multilaterally through international trade negotiation rounds. The multilateral trading system was legally institutionalized in 1994 at the conclusion of the Uruguay round when the Marrakesh Agreement established the World Trade Organization (WTO), the new pillar of global governance in charge of pursuing global free trade. Similarly, the first-best solution to global environmental issues such as climate change would be a multilateral environmental organization. However, as this is unlikely to become a reality in the near future we must accept multilateral environmental agreements (MEAs) as the best forum for addressing global environmental issues. Although potential synergies exist between trade and the environment (Anderson and Blackhurst, 1992; Cosbey, 2004; Esty, 2001; Galeotti and Kemfert, 2004; Green, 2005; Panayotou, 2000), to date the WTO has not been very successful in dealing with trade–environment issues and, given the current slow progress towards a multilateral trading system, significant changes seem unlikely to emerge in the short run. At the same time, regional trade agreements have become a preferred forum in which to accelerate and deepen trade...

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