an interpretation by decision of a three-fourths majority of the WTO members. But, if it will be difficult at this time to muster a two-thirds majority of the WTO membership to amend WTO rules to reconcile trade with climate change, it will be even more difficult to assemble a threefourths majority to interpret existing WTO rules to do so. Like an amendment, an interpretation is not now a practical political option. Despite the difficulty, however, in order to facilitate the carbon pricing needed to spur the needed transition away from a carbon economy, WTO members should approve a legal interpretation now that would eliminate the current uncertainty about whether carbon taxes are eligible for a border tax adjustment under the current WTO rules.78 A legal interpretation should clarify that a tax on inputs — such as fossil fuels — that are not incorporated physically into a final product is a tax on a product that is eligible for a border tax adjustment. The same legal interpretation should also clarify that a tax on the greenhouse gases consumed or emitted in making a product is an indirect tax that may be adjusted at the border.79 Option four: incorporation by reference in a WTO climate waiver A fourth option would be for the members of the WTO to incorporate the COP definition of a climate response measure by adopting the same provision as part of a WTO climate waiver.80 Waivers are permissible under WTO rules,81 and they have frequently been granted by WTO members. Although most waivers have been for narrow purposes, waivers can be granted for broad purposes in “exceptional circumstances,” as has been done with compulsory licensing of medicines and the suppression of trade in conflict diamonds.82 Moreover, although most waivers have waived the obligations of just one WTO member, collective waivers for groups of WTO members or for all WTO members are permissible.83 The
78 General Agreement on Tariffs and Trade, 30 October 1947, 55 UNTS 194, art II:2(a) (entered into force 1 January 1948). 79 For a more extensive discussion of this issue, see Bacchus, “The Content”, supra note 76 at 12–13. 80 Ibid. 81 Marrakesh Agreement, supra note 50, art IX:3.
rules provide that a decision to grant a waiver shall be taken by three-fourths of the WTO members.84 In practice, however, although a vote was taken on a handful of waivers soon after the establishment of the WTO in 1995, all WTO waivers since then have been adopted by consensus. At first glance, the process for adopting a climate waiver may seem to present as imposing a hurdle as the processes for adopting an interpretation or an amendment. However, a waiver may be more palatable to WTO members than an amendment or an interpretation of existing WTO rules. A waiver does not change WTO rules; it only waives the application of WTO rules for certain kinds of carefully described and delimited measures. Moreover, a waiver is not permanent. It is temporary and subject to annual review. A climate waiver could be structured in the same way as the waiver for compulsory licensing of medicines, which states that it will terminate only on the date when an amendment replacing the provisions of the waiver takes effect. Even then, a waiver would be more politically appealing than other available options for reconciling trade rules with climate necessities in that it would provide an opportunity for practical experimentation within the overlap of trade and climate change. The members of the WTO are inclined toward practical experimentation.
Conclusion Again, if agreeing on the definition of a response measure were easy, it would already have been done. It is a sad commentary on the history of the climate regime that, so far, it has not been done. But past failures need not prevent future successes. Rather, learning from failure can lead to success. Nearly three decades of climate negotiations should have revealed by now that the debate over climate response measures can only be resolved if the legitimate concerns of developed and developing countries alike are acknowledged and addressed. That is the only way the climate regime can ever agree on a definition of a response measure. Furthermore, the lesson should have been learned by now that, no matter how much the topic of trade is considered a taboo in climate negotiations,
82 Ibid, art IX:4. 83 Bacchus, “The Case”, supra note 11 at 23.
84 Marrakesh Agreement, supra note 50, art IX:3.
What Is a Climate Response Measure? Breaking the Trade Taboo in Confronting Climate Change
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