Tuesday, October 03, 2006

Can Stiglitz save the planet?

A good post from Economist's View on the role of the WTO and climate change. There is an academic literature out there looking at environmental regulations as an indirect trade barrier (Ederington and Minier) - the text below provides an interesting new perspective.

There is even a paper in the most recent Global Economy Journal by Raymond McDermott (that I have not read yet) called "Trade Agreements and the Environment: An Industry Level Study of NAFTA".

Can WTO trade sanctions save the planet?

Felix Salmon wonders if Joseph Stiglitz is on to something:

Kyoto intransigence as illegal subsidy, by Felix Salmon, Economonitor: The CGD's Lawrence MacDonald reports on one of Joe Stiglitz's bright ideas:

U.S. trade partners [should] ask the WTO for authority to impose countervailing duties on exports of U.S. steel and other energy-intensive products that benefit unfairly from Washington’s refusal to join the Kyoto Protocol limiting carbon and other greenhouse gasses.

The logic is kinda fabulous:

There is a precedent for such duties, Stiglitz said, because Washington previously obtained a World Trade Organization ruling in support of a U.S. ban on the import of shrimp caught in Thailand using nets that killed endangered species of turtles. "I asked one of the (WTO) appellate judges (involved in the decision) whether he understood what the implications were for global warming, because clearly if you can impose a trade sanction to save a turtle, you can impose a trade sanction to save the planet," Stiglitz told a standing-room only audience. “And the judge said, yes… we were aware of where this was going.”

MacDonald says this is Stiglitz's "most interesting and important" idea – could it really happen?

Lawrence MacDonald has the answer. Referring to Stiglitz' book, he says:
The book contains a detailed explanation of the proposal--and an interesting discussion of the response his idea has received so far from senior officials:

I have discussed this idea with senior officials in many of the advanced industrial countries that are committed to doing something about global warming. And while, almost to a person, they agree with the analysis, almost to a person they also show a certain timidity: the proposal is viewed by some as the equivalent, in the trade arena, of declaring nuclear war. It is not. It would, of course, have large effects on the United States, but global warming will have even larger effects on the entire globe. It is just asking each country to pay for the full social costs of its production activities. Following standard practice, the pressure of trade sanctions could gradually be increased; and almost surely, as America recognizes the consequences, its policies would be altered--as they have been in other instances where the United States has been found in violation of WTO rules.

Until there is a change in leadership in the U.S., little will change.

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