Bali Climate Conference: The Next Two Years Will Tell

1 November 2007

The most important outcome of the December climate change conference in Bali was to bring all governments on board to negotiate a successor
treaty to the Kyoto Protocol, ending years of disagreement on a global approach to the challenges posed by rising temperatures.

Two weeks of arduous negotiations in Bali resulted in a unanimous recognition that ‘deep cuts’ in greenhouse emissions would be necessary to prevent dangerous human interference with the climate system. The Bali Roadmap commits the nearly 200 governments that attended the talks, including the US, to negotiate a global agreement to achieve this goal. The negotiations should conclude by 2009, so that a new international climate regime can enter into force when the Kyoto Protocol expires in 2012.

Commitments Remain Vague

The roadmap leaves out any specific future greenhouse gas reduction targets or deadlines for achieving them. It commits all countries to consider “enhanced national/international action on mitigation of climate change.” For developed countries, such action would include “quantified emission limitation and reduction objectives […] while ensuring the comparability of efforts among them, taking into account differences in their national circumstances.” Among potential developing country measures are “nationally appropriate mitigation actions […] in the context of sustainable development, supported and enabled by technology, financing and capacity-building.”

The roadmap also suggests that negotiators consider the economic and social consequences of response measures, as well as opportunities for using markets to enhance the cost-effectiveness of mitigation action, and scaling up the development and transfer of environmentally sound technologies to developing countries.

A fund was established in Bali to provide financial assistance to help developing countries adapt to adverse effects of climate change. Governments also agreed to reward developing countries for curbing deforestation.

The next major negotiating meetings will take place in Poznan, Poland, in December 2008 and Copenhagen, Denmark, in 2009.

For more details, see Bridges Trade BioRes, 18 December 2007

Ministers Discuss Links between Commerce and Climate Change

Bali marked the first time that trade officials met in parallel with climate negotiators. Ministers and senior government representatives from the US, Brazil, Japan, the EU, China, India and several other Asian and European countries – but none from Africa – attended an informal meeting intended as a platform for information exchange, rather than negotiation.

Ministers underlined that the most important contribution of the multilateral trade regime to climate change would be a successful and balanced conclusion of the Doha Round negotiations, including the environment mandate.

While the participants acknowledged that several measures addressed at the WTO – such as standards, subsidies, taxes and intellectual property rules – could have climate-related implications, they also made it clear that the issue should be tackled primarily in environmental fora. Indeed, most cautioned against the use of trade restrictions, either to compel others to action on climate change or to address competitiveness. US Trade Representative Susan Schwab, for instance, emphasised that “WTO Members should be cautious to avoid a rush to restricting trade in the name of climate change action.”

However, David O’Sullivan, a top trade official at the European Commission, warned that failure to reach a global deal on climate change could complicate international trade relations: policy-makers could find themselves having to consider the use of trade policy tools, including controversial border tax adjustments on certain imports in order to achieve climate change objectives (see page 15).

Ministers agreed that, in accordance with the principle of ‘common but differentiated’ responsibilities, steps to address climate change must leave developing countries enough room in which to develop. However, they expressed concern about “the lack of adequate studies or empirical evidence” on the links between trade, climate change and poverty eradication, and called for further research in the area to enable governments to make more informed decisions.

Participants also discussed a recent proposal by the EU and the US for all WTO Members to liberalise trade in some 43 products identified by the World Bank as providing direct climate change benefits (see page 8). Brazil’s Foreign Minister Celso Amorim strongly criticised the EU-US list of products for not including ethanol, the “single product whose effect on climate change is already demonstrated.” He stressed that liberalising the ethanol trade would benefit other developing countries with conditions similar to Brazil. Mr Amorim also pointed to an anomaly in tariff classification for different biofuels: ethanol is classified as an agricultural product (which makes it easier for rich countries to shield it from tariff cuts) while biodiesel is considered to be an industrial good. He said that there was no rationale for the discrepancy, and called for it to be corrected.

USTR Schwab rejected complaints that the EU-US list consisted only of products of export interest to industrialised countries. She said that the US was in fact a net importer of the 43 products in 2006, with US$18 billion in imports surpassing exports by US$3 billion. The two top sources for those products were Mexico and China, she added. Officials from both China and India raised concerns about barriers to accessing foreign technology. Notably, India referred to intellectual property protections as a potential obstacle, and called for a consideration of revisiting WTO intellectual property rules so as to ensure that they adequately respond to Members’ pursuit of technology transfer objectives. Several developed country delegations warned that weakening the intellectual property regime could undermine innovation, and thus ultimately be counterproductive.

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