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Description

Climate change policies aimed at controlling emissions of greenhouse gases (GHG) are leading to realignment in the production and consumption of goods and services across the world. As Annex I Parties to the Kyoto Protocol are taking various measures ranging from tightening of energy efficiency standards, carbon cap-and-trade programmes, and carbon taxes, concerns have been raised that industries in these countries will find themselves at a disadvantageous position vis-à-vis countries where such mandatory measures are not implemented. There is growing fear that this may lead to "carbon leakage" through industrial relocation from OECD to non-OECD countries, especially for energy-intensive industries, such as steel, cement and chemicals targeted by climate policies. As a major emerging economy not bound by mandatory GHG reduction obligations, China is at the centre of some of these concerns. In the context of international trade, there are concerns that industries in countries implementing stringent climate change policies will have to compete with exports from those in countries where costs of production may be lowered as a result of the absence of mandatory emission reductions on producers. These concerns have prompted calls within industry as well as by politicians for the introduction of measures, including trade measures, to offset competitive imbalances and level the playing field. Rhetoric over the use of border tax adjustments and measures with similar effects has particularly been prominent in this regard. China is poised to weight heavily on the process and outcome of these debates through its domestic policies and modalities of its participation in the crafting of multilateral regulatory frameworks. In that context, a number of opportunities and challenges for sustainable development arise both for China and the international community at large. This event aims to generate discussion on issues in the trade - climate change relationship that may impact on global competitiveness, with a particular focus on the role of China. Participants will review initial empirical insights on the impact of climate measures on international trade flows and global competitiveness, discuss some of the initiatives being considered in major economies as a way to address competitiveness concerns, and explore current and plausible future approaches to dealing with climate change that are being contemplated in China.