Climate Change and Trade Policy: From Mutual Destruction to Mutual Support

common: a common problem (a global “public good”) common foes (vested interests using

protection for slowing down climate change policies) and common friends (firms delivering

goods, services and equipments which are both cleaner and cheaper). They have thus many

reasons to buttress each other. The climate community would enormously benefit from

adopting the principle of “national treatment” which would legitimize and discipline the use

of carbon border taxes adjustment and the principle of “most-favored nation” which would

ban carbon tariffs the main effect of which would be to fuel a dual world economy of clean

countries trading between themselves and dirty countries trading between themselves at a

great cost for climate change. And, the trade community would enormously benefit from a

climate community capable to design instruments supporting the adjustment efforts to be

made by carbon-intensive firms much better than instruments such as antidumping or

safeguards which have proved to be ineffective and perverse. That said, implementing these

principles will be difficult. The paper focuses on two key problems. First, the way carbon

border taxes are defined has a huge impact on the joint outcome from climate change, trade

and development perspectives. Second, the multilateral climate change regime could easily become too complex to be manageable. Focusing on carbon-intensive sectors and building “clusters” of production processes considered as having “like carbon-intensity” are the two main ways for keeping the regime manageable. Developing them in a multilateral framework would make them more transparent and unbiased.