and Investment Policy, Technology Transfer and Climate Change

by the International Institute for Sustainable Development and Chatham House

This event presented research on intellectual property rights (IPRs),
low-carbon goods trade liberalization, border carbon adjustment, subsidy reform
and investment, the policy linkages between them and their implications for
developing countries.

Peter Wooders, IISD, discussed border carbon adjustments (BCAs) to address
competitiveness and leakage issues for domestic industries. He said BCAs
include, inter alia, border taxes in countries that have carbon caps and
mandatory carbon emissions permits purchase for importers. He noted questions
on: how to detect leakage and attribute it to specific causes; how to calculate
carbon dioxide emissions embedded in imports; whether BCAs are WTO-legal; and
whether BCAs can substitute for a global carbon price.

Christophe Bellmann, International Centre for Trade and Sustainable
Development, spoke on the potential gains of liberalising trade in
environmental goods and services (EGS) as an incentive for the innovation and
dissemination of climate-friendly technology. He cautioned that: EGS has not
been defined; some goods have "dual" environmental and
non-environmental uses; and that they are coded in the WTO according to other

Bernice Lee, Chatham House, spoke on the question of whether intellectual
property rights (IPRs) represent a barrier to the diffusion of clean
technologies. She noted firms’ desire to ensure a share of the market later
before bearing investment risks. She listed tools to overcome market failures,
including: public funding; tax incentives; incentives for collaborative
partnerships for research and development; and low-cost guaranteed loans.

Aaron Cosbey, IISD, spoke on subsidy and investment policies. He advocated
subsidy reform to lower fossil fuel use, trade law flexibility to allow for
subsidies to address climate change and increase clean energy development, and
investment in clean energy for developing countries.

Tariq Banuri, UN-DESA, noted that the poorest people in developing countries
have limited access to clean energy, and will have even less access if the
price of clean energy is high, unless countries create differential internal
pricing structures.

Eduardo Sanhueza, ECLAC, noted that small developing countries are not
generally competitive, are only beginning to understand the implications of
climate change on their economies, and will have difficulty grappling with
economic impacts of measures to address climate change.

Jacob Werksman, World Resources Institute, commented that trade measures are
the "price" for passing national climate change regulations, which
could lead to friction between the trade and climate change regimes. He asked
how this friction can be reduced and noted the need for legitimacy, a narrow
scope, and comparability in trade measures.

Participants discussed: the absence of consideration of agricultural
environmental goods within the WTO; developing country concerns about damage to
domestic environmental goods producers from opening borders; the amount of
production affected by trade measures; comparability versus equity; and the
potential conflict between addressing environmental problems and poverty.