The difficulty of linkage – the current multilateral frustrations in the trade & climate nexus

Where are we now with regards to the interface of trade and climate change?

It is a rather frustrating time at the moment for moving multilateral governance forward. In the climate negotiations, what has been agreed on in the form of financing, technology
transfer and, most importantly, emission cuts, is far from perfect. Many propose for the
current situation to be an opportunity to do a bit of soul searching in trying to find the ways
forward. However, it does not seem certain that such soul searching will lead one to any easy or comfortable conclusions, though more of the same is clearly not working in the multilateral setting. With regards to climate, there seems to be more than just economic strategizing holding the handbrake. An intangible crisis might simply not exert an intrinsic pull on the human being, with the mind-set of ex post reactiveness still carrying the day. In trade, we seem to have reached some of the limits of the common ground that would allow countries to engage multilaterally in a resolute fashion.

If one thinks about the intersection of trade and climate specifically and as an own entity, these fundamental difficulties are further exacerbated by rather superficial integration of the two communities and poor communication of priorities. Put simply, there is no strong linkage occurring at the moment in trade and climate between international institutions. The bridge we have built is mostly in the form of exogenous analysis and commentary rather than serious and lasting multilateral institutional linkage. This is not all that surprising, perhaps not even inappropriate, considering the very slow movement on both sides of the trade and climate interface. Simply put, neither side is probably ready to conduct any meaningful linkage yet, which harkens back once again to the failing negotiations on both sides and the wider member tensions in both multilateral settings. Brring such direct multilateral progress, it might be that a ‘messier’ landscape is emerging on both sides of the trade & climate divide with a greater deal of regional and bilateral activity and generally a greater degree of dispersing of energy away from the multilateral institutions and towards national initiative. The multilateral institutions would have important but very different roles to play in such a landscape, and very interesting legal issues might arise concerning the applicability of progress made in other fora for the multilateral institutions. In other words, we would see whether a more heterogeneous new environment of international cooperation is ignored or somehow acknowledged, accepted, and perhaps even integrated into the current institutions of international governance. In a scenario of good fortune, perhaps taking a timeout from multilateralism and entering a more fluid state can over time be conducive to solving some of the differences of the international community in these two areas. In such a scenario, the multilateral institutions could be reawakened from their negotiation slumber land if such a landscape of change once again settles into something sufficiently homogenous to once again be codified multilaterally. This is of course highly speculative at this point, and many of the avenues for resolving power tensions may not be of a positive nature. Whatever the scenario, the non-negotiable loss that faces further multilateral action seems to be, at the very least, time.

The result of the current failings in the multilateral spheres of both trade and climate is
that we are left with very important issues that are essentially orphans lacking a clear
institutional home. If one adopts the lens of viewing the world as an international community, this makes us basically unable to deal with some of the most important issues facing us at the moment with the tools that we are most used to. If this is indeed the way we are headed, the factor of time cannot be underestimated. Whereas new forms of international cooperation is not inherently a good or bad thing, what is certain is that it will take time for such a new landscape to emerge, let alone to figure out what melding, if any, there will be with multilateral institutions. Time, unfortunately, is not on our side with regards to the climate change mitigation side of things, whereas it is probably less of an issue on the trade side. The loss of time that might ensue from a prolonged period of uncertainty could be of pivotal significance, even when accounting for national and regional action on both climate change and trade. Such a state of affairs could even provide an incentive for sliding the scale further towards national and regional self-sufficiency, in order to strengthen national and regional policy effect while minimizing the threat and impact of potential trade and climate policy conflicts with third parties.

For the time being, the dispute between Japan and Canada, DS 412, that is currently
making its way through the WTO DSM is helpful to follow. How this case is argued and the
eventual statements made by the Panels and the Appellate Body might improve our
understanding somewhat of where we currently stand with regards to interpreting current
WTO rules in a way that accounts for new realities. Unless parties to these and other
disputes bring highly aggressive lines of argumentation that essentially boil down to
ultimatums for the Appellate Body, we are likely to see a continued focus on easy solutions to hard questions while keeping the door as open as possible for national policy flexibility.

There have been several disputes which commenters have feared could threaten the integrity of the WTO DSM, and each time it has been shown that such fears were overblown. Hopefully, this is indication that there is a good deal of awareness about the balancing act that is likely to grow finer and finer as the pressure for interpretational evolution increases. If we do see a messier policy landscape steadily gaining in strength as multilateral non-progression lingers on, one could imagine the increased momentum of the non-multilateral sphere and its resulting initiatives risking to put both WTO centricity and WTO trade adjudicators in a tough spot before long.


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