WTO Law and Trade Policy Reform for Low-Carbon Technology Diffusion

Front matter

World Trade Institute Advanced Studies - 5

Zaker Ahmad

BRILL | NIJHOFF wTo Law and Trade Policy Reform for Low-Carbon Technology Diffusion

Contents

N

Acknowledgements xI List of Boxes and Figures XIII Abbreviations and Acronyms XIV

Introduction 1 ı Mitigation of Climate Change: Fact vs.Law 6

Introduction

Institutions — the rules and norms that guide human interactions — enable or impede the structures, mechanisms and measures that guide mitigation and adaptation. Institutions, understood as the ‘rules of the game’, exert direct and indirect influence over the viability of 1.5°C-consistent pathways.

IPCC Special Report 2018!

The current relationship between trade and climate change can be aptly described as a clash of objective truths with narrow politico-economic interests. While the science calls for rapid improvements in transfers of mitigation technologies among others, existing legal infrastructure prioritising commercial and political interests retard that process. It is not altogether novel to hold that transboundary economic transactions like trade and investment greatly enhance the level and scale of the dissemination of technologies necessary to combat climate change. Researches to this effect have been in existence since the early 2000s.? Unfortunately however, this insight has not permeated into the institutions regulating such economic transactions. Institutions, being the ‘rules of the game’ as quoted above, are creations of public international law at their very core. Despite this shared root, linkages between different rule-frameworks regulating international trade on the one hand and climate change on the other still remain only in the realm of possibility. One key drawback that prevents strong interlinked institutions from developing is that global rules can only go so far as the least willing participant is ready to venture. On one end, the talk of trade measures for climate technology diffusion is unpalatable in the climate domain. James Bacchus recently noted how conflicts of sentiments have relegated trade issues to the position of being ‘taboo’ in climate

1 Heleen de Coninck and others, ‘Strengthening and Implementing the Global Response’ in Valerie Masson-Delmotte and others (eds), Special Report: Global Warming of 1.5°C (World Meteorological Organization (WMO) 2018) 352 <http://www.ipcc.ch/report/sr15/> accessed 15 October 2020.

2 IPCC, Methodological and Technological Issues in Technology Transfer (Bert Metz and others eds, Intergovernmental Panel on Climate Change 2000).

© ZAKER AHMAD, 2021 | DOI:10.1163/9789004446090_002 This is an open access chapter distributed under the terms of the cc BY-NC-ND 4.0 license.

2 INTRODUCTION discussions.? On the other end, a growing number of trade disputes challenge measures touching upon climate change one way or the other.+

Against this backdrop, the present volume offers an alternative narrative, putting the need for clean technology diffusion at the forefront, at the same time making suggestions to tune the trade law regime to play a complementary part therein. This is done upon the foundation of a proposed doctrine and framework of ‘Common Concern of Humankind’ (hereafter referred to also as ‘Common Concern, for short). The notion is itself well-established, especially in the field of climate change. While its lingering presence has been interpreted as a clarion call for concerted efforts to be made by all involved parties, specifics of the required actions have never been detailed. The proposed doctrine facilitates that step. It calls for assuming — (i) responsibilities of good faith cooperation by the stakeholders, (ii) diligent measures to tackle a concern domestically, and as a last resort, (iii) recourse to unilateral countermeasures against negligent non-compliance.° In brief, the doctrine of Common Concern of Humankind is a propositional framework of norms to conceptualise, also respond to the collective action problems regarding global public goods (GPG s) of critical importance. To distinguish the proposed normative framework from the traditional understanding of ‘common concern of humankind’, a terminological distinction is maintained throughout the work.®

The chief attraction of having a normative structure and specific legal consequences, possibly as a principle of public international law, lies in the possibility of resolving the conflicts briefly outlined above. It cannot be denied that having in place an international law principle that can objectively guide suitable responses as new global hazards emerge, is indeed lucrative. Unlike the current practice of understanding common concern of humankind by

3 James Bacchus, ‘What Is a Climate Response Measure? Breaking the Trade Taboo in Confronting Climate Change’ (Centre for International Governance Innovation (CIGI) 2019) 220.

4 For example, Canada - Certain Measures Affecting the Renewable Energy Generation Sector / Canada - Measures Relating to the Feed-in Tariff Program [2013] Panel Report wT/DsS412/R and Add.1; wr/Ds426/R and Add., DSR 2013: I 237; India — Certain Measures Relating to Solar Cells and Solar Modules [2016] Appellate Body Report wr/Ds456/AB/R; ‘China — Certain Measures on the Transfer of Technology: Request for Consulatation by the European Union (Revision)’ (2019) wr/Ds549/1/Rev.; G/L/1244/Rev.; 1P/D/39/Reva.

5 Fora detailed introduction to the doctrine, see, Thomas Cottier (ed), The Prospects of Common Concern of Humankind in International Law (Cambridge University Press 2021). The first chapter of this book also elaborates the doctrine in the particular context of low-carbon technology diffusion.

6 When referring to the traditional usage of the term, small letters are used, e.g. ‘common concern’ or ‘common concern of humankind’ The proposed enhanced attributes of the concept are referred to as a doctrine, using capital letters, e.g. ‘Common Concern’.

INTRODUCTION 3 assigning it a reluctant meaning, one that reflects the lack of bold steps in climate affairs, the doctrine takes a more forward-looking approach. The avenues of normative consequences proposed by the doctrine as emerging from the expression of Common Concern, are geared towards effective solution of that ‘concern’ It is pragmatic at its very core, making the case for a new realism, as Thomas Cottier suggested.” While the doctrine in some aspects just states the obvious regarding the climate change discipline (e.g. the duty to cooperate, or to take adequate response actions domestically), others offer substantial provocation (e.g. unilateral trade countermeasures) to begin dialogues.

Research in this book will examine the intersections of and linkages between low-carbon technology diffusion and trade using the doctrine of Common Concern as the principal theoretical framework. This attempts to serve two purposes. One is, as already mentioned, to supply a blueprint of an alternative approach to trade and technology diffusion in the climate context. The second purpose is to make specific observations on the practical utility of the doctrine itself. Therefore, with respect to the problem of trade and low-carbon technology (LCT) diffusion, the research touches upon, step by step, all the normative facets of the doctrine, i.e. (i) cooperation, (ii) homework, and (iii) unilateral compliance enforcement through countermeasures.

The first chapter acquaints readers to the factual, conceptual and regulatory specifics of the research. It begins with a portrayal of the need for low-carbon technology diffusion and the potential role of trade regulation. Upon that foundation, the doctrine of Common Concern of Humankind is introduced and its potential utility in meeting the technology needs using trade law and policy measures is elaborated. The second chapter takes a deep dive into the institutional expressions of technology development and transfer in the climate and the trade regimes. The findings therefrom are then assessed against the current empirical understandings of the barriers to low-carbon technology diffusion. This leads to a clear understanding of the nature of cooperation required to tackle the absence of effective regulation. The conclusions feed into the third chapter, which outlines the new narrative of trade cooperation and policy measures to facilitate LCT diffusion. The principal argument in that chapter is that it is possible to fashion factually informed, and mutually beneficial trade measures that would enable the LCT s to spread further. Cooperation among the wTo members, within the organization and also beyond, should be geared to bring such measures into effect.

7 See, Conclusion, Thomas Cottier, ‘The Principle of Common Concern of Humankind’ in Thomas Cottier (ed), The Prospects of Common Concern of Humankind in International Law (n5).

4 INTRODUCTION

Corresponding to the homework aspect of the Common Concern doctrine, chapters 4 and 5 each present a case study of a specific trade measure that can facilitate the diffusion of low-carbon technologies in a given context. While constraints of space and scope prevent extensive analyses of all possible trade-related actions, these two studies provide a glimpse of issues that may arise in practice. Chapter 4 examines the implications of an emission pricing measure coupled with utilisation of the generated revenue for technological improvements in the developing countries. This leads to the long-standing and unresolved issue of discrimination claims regarding the non-product related process and production measures (PPM s). In a similar-structured analysis, chapter 5 looks at the ramifications of easier terms of credits offered by the governments for exports involving LcTs. This leads to yet another lingering issue of amending the wTo agreement on subsidies and countervailing measures. Both chapters look at the proposed measures’ compliance with the existing WTO rules and highlight the possible benefits of a recourse to the proposed Common Concern doctrine. Necessary suggestions are made in both cases.

Chapter 6, the final chapter of the volume, delves into a study of the utility and the practical applicability of unilateral trade countermeasures deployed as part of the Common Concern framework. While it is true that unilateral self-help measures for perceived breaches of trade commitments are explicitly prohibited under the wTo rules, it is also true that in some limited areas (e.g. the security exceptions), members enjoy greater freedom to impose restrictive measures on others. The chapter also explores the possibility of using the Common Concern doctrine to retain the benefits of unilateralism while taming the opportunistic use of such a power.

In the end, a conclusion summarises the overall findings of the research, including the lessons learnt on the utility of the proposed normative framework of Common Concern of Humankind. A brief outlook, as part of the conclusion, forecasts potential areas where this field of research can further expand into.