Climate-related trade measures implemented against non-parties to the Kyoto Protocol or parties which fail to meet their commitments will most likely be presented as defensive and offsetting. An important impact, however, may be to render participation in and compliance under the climate regime more attractive. This chapter has examined how the potential of such measures to induce more climate-friendly policies is affected by three aspects of interplay between global trade rules and the Kyoto climate regime.

At the core of this institutional interplay is the normative consistency of the trade-related rules of the two regimes and the hierarchical relationship between them. The stronger clout of the WTO compliance system and the compulsory nature of its dispute settlement procedures suggest that should a member of this regime believe that its rights are violated by climate-related trade measures, the normative compatibility of the two regimes would be settled by WTO bodies. Such bodies have so far tended to interpret narrowly the exceptions to the general ban on embargoes and discrimination. The deference of the climate regime to the basic principles of the WTO, and the lack of any provisions for authorization or coordination of such measures under the climate regime, make it probable that this would be the case in a climate-related dispute as well.

This said, the nature and significance of normative compatibility depends upon the participatory interplay of the two regimes, especially how they differentiate groups of actors with regard to the rights and obligations they enjoy under the regimes when seen in conjunction. Non-members of the WTO receive the least protection, and their vulnerability will largely be determined by their interdependence relationships, economic and political, with the prospective enforcers. Such power considerations will weigh heavily among WTO members as well, but ceteris paribus, trade measures that are authorized or preferably mandated under a multilateral environmental agreement would generally fare better than unilateral ones, especially if the target of trade restrictions is party to the environmental agreement. Beyond this, the findings of a dispute settlement panel or appellate body would presumably differ depending on the status of the target under the Kyoto Protocol. A non-complier with Kyoto commitments would be more shielded than a non-party, because by joining the Kyoto regime a non-complier has exposed itself to regime-internal and less trade-intrusive measures that should be exhausted first.

The final aspect of interplay discussed here, the linkage of rule making and decision making under the trade and the climate regime, may in principle change this situation. Today there is only moderate cross-agency coordination, but considerable attention within each regime to the desirability of avoiding conflict between them. Participants in the global trade regimes have decided to renegotiate the balance struck between protection against unjustified trade discrimination and room for pursuance of environmental objectives. The mandate for the Millennium Round of trade negotiations could result in modifications of the WTO regime which would expand the environmental window of the global trade regime, for instance by an interpretive statement on the environmental exceptions which confirm or even broaden the limited deference to environmental goals afforded in recent dispute settlement body reports. On the other hand, the lack of trade provisions in the Kyoto regime, and the fact that further strengthening the contents of the Protocol is not a current preoccupation of climate negotiators, make it less likely that provisions or concerns articulated under the climate regime will be prominent in this WTO process.

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