Two of the major contemporary policy issues facing the world are climate change, and sustainability more generally, and international trade.
Although generally thought of in silos, climate and trade do in fact have many points of intersection which will become clearer, more intensive — and possibly even more confrontational — in the coming years. It is thus important that research and discussion on these points of intersection be undertaken now in order that the world might cope better with whatever outcomes evolve.
Ideally, future climate change policies will support keeping markets open for trade and investment, thereby enabling sustainable growth while trade policy will support, and certainly not impede, good climate change policies.
But to date, those persons and organizations interested in climate change issues, and those interested in advancing the cause of the greater movement of goods, services, technology, ideas and people across borders, have had little to do with each other: their constituencies differ, their purposes differ, and their values differ.
Of these three fundamental differences, perhaps the clash of values is the most serious. In an intellectual sense for two centuries, and in a policy and institutional sense since the mid-20th century, trade people have advocated equal access: open borders, free markets and strong competition.
On the other hand, climate change people have argued for common but differentiated responsibilities, namely, the imposition of commitments on developed countries (and particularly on their carbon-intensive sectors) to lay the foundation for key developing countries later to adopt limits on their carbon-emissions.
Even if an internationally-argued on price for carbon comes into being as part of a global effort to reduce damaging greenhouse gas emissions over the coming years, there will be trade policy implications that will have to be addressed.
If border tax adjustments are evoked, for example, there is a question of whether or not such action will be defensible politically and legally under the provisions of the GATT/WTO.
If, instead, a cap-and-trade regime is established by one or more countries for climate change reasons, will free permits or allowances favourable to the energy-intensive sectors of any given trading partner be considered illegal subsidies and thus be subject to trade policy sanctions as provided for in various international trade agreements including the WTO? And, quite separately, would present-day consumer subsidies for fossil fuels be permitted under international trade law?
Both climate change and international trade are global, collective issues that require collective action. And collective action requires compliance which in turn requires enforcement. Effective enforcement requires sanctions; a good first step to avoid these often damaging and counter-productive sanctions might be the development of a coherent, transparent process for globally-managed monitoring, surveillance, and peer review procedures to maximize the likelihood of consistent, mutually-supportive outcomes.
In this proposed system of global oversight, each climate change or trade initiative would compliment and support the other rather than conflict with, and constrain, the other.
Such a concrete and feasible first step, internationally-agreed to, and respected by all, would be a necessary, yet not sufficient, condition for sustainable growth and for improved human well-being in the years ahead.
John Curtis served as DFAIT's first chief economist and is now a distinguished fellow with the Centre for International Governance Innovation.