THE INTERFACE BETWEEN THE TRADE AND CLIMATE CHANGE REGIMES: SCOPING THE ISSUES. By Patrick Low. World Trade Organization, January 2011. As governments increasingly adopt policies to reduce greenhouse emissions, concern has grown on two fronts. First, carbon leakage can occur when mitigation policies are not the same across countries and producers seek to locate in jurisdictions where production costs are least affected by emission constraints. The risk of carbon leakage raises questions about the efficacy of climate change policies in a global sense. Secondly, it is precisely the cost-related consequences of differential mitigation policies that feed industry concerns about competitiveness. We thus have a link between environmental and competitiveness perspectives that fuses climate change and trade regimes in potentially problematic ways as governments contemplate trade actions to manage the environmental and/or competitiveness consequences of differential climate change policies. On the trade side of this relationship, we have the reality that the GATT/WTO rules were not originally drafted to accommodate climate change policies and concerns. The purpose of this paper is to analyse the relevance of certain WTO rules to the interface between climate change and trade, focusing in particular on border measures, technical regulations on trade, standards and labelling, and subsidies and countervailing duties. The paper is available for download here.
SCOPE AND DEFINITION: UNCTAD SERIES ON ISSUES IN INTERNATIONAL INVESTMENT AGREEMENTS II. United Nations Conference on Trade and Development, March 2011. A new UNCTAD paper, the sequel to the 1999 Pink Series paper on "scope and definition", considers how the concepts of "investment" and "investor" have been defined in existing international investment agreements (IIAs), and how different definitions have been interpreted by arbitral tribunals. The paper moves beyond a merely descriptive role and considers how to respond to arbitral awards. It offers policy options for IIA negotiators that better take into account the development needs of host countries and enhance the stability and predictability of the legal system. The paper concludes with a section on policy options for IIA negotiators. It argues that adding a development policy dimension to the technical definition of investment would help bring developmental concerns to the centre of the agreements' objectives and to the fore of tribunals' considerations (i.e. even before going into a substantive assessment of contested host country measures). Adoption of such a practice would be an important step towards making IIAs contribute to economic sustainability. This paper is available for download here.
THE TRANS-PACIFIC STRATEGIC ECONOMIC PARTNERSHIP AGREEMENT: A LATIN AMERICAN PERSPECTIVE. By Sebastián Herreros. Economic Commission for Latin America, March 2011. In March 2010, negotiations aimed at enlarging the Trans-Pacific Strategic Economic Partnership Agreement (TPP) were launched. Nine countries from Asia, Oceania and the Americas currently participate in them. The United States, which in practice has assumed a leading role, has stated that this process has the ultimate goal of transforming the TPP in a platform for a high-quality, large-scale trans-Pacific economic integration. For the current two Latin American participants (Chile and Peru), as well as for other prospective candidates, the TPP offers the possibility of strengthening their trade and investment links with Asia Pacific, the world's most economically dynamic region. The TPP could also make a meaningful contribution to "tame the tangle" of preferential trade agreements across Asia Pacific. However, given the current set of participants, the negotiations offer both Chile and Peru little in terms of improved market access. Moreover, they are characterized by uncertainty as to their content, architecture and membership, as well as by risks such as having to make new concessions in sensitive areas like intellectual property and investment. Overall, the success prospects of the TPP negotiations depend largely on how the trade policy environment in the United States evolves during 2011. This paper is available for download here.
MOST-FAVOURED NATION TREATMENT. United Nations Conference on Trade and Development, January 2011. The inclusion of most-favoured-nation (MFN) treatment provisions in international investment agreements followed its use in the context of international trade and was meant to address commitments made by States in free trade agreements to grant preferential treatment to goods and services regarding market access. However, in the context of international investment that takes place behind borders, MFN clauses work differently. The paper contains an explanation of MFN treatment and some of the key issues that arise in its negotiation, particularly the scope and application of MFN treatment to the liberalization and protection of foreign investors in recent treaty practice. It also provides policy options as regards the traditional application of MFN treatment and identifies reactions by States to the unexpected broad use of MFN treatment and provides several drafting options, such as specifying or narrowing down the scope of application of MFN treatment to certain types of activities, clarifying the nature of "treatment" under the international investment agreements, clarifying the comparison that an arbitral tribunal needs to undertake as well as a qualification of the comparison "in like circumstances" or excluding its use in investor-State cases. This paper is available for purchase here.