What the WTO can learn from Paris climate talks
For many years, negotiators at the annual conferences of the United Nations Framework Convention on Climate Change looked longingly at how the World Trade Organization was able to negotiate effective international agreements. Ironically, the Paris climate talks that are scheduled to conclude on Friday and the WTO negotiations, which will take place next week in Nairobi, lead to the opposite conclusion. Trade negotiators should emulate the progress made in the climate change agreements by moving away from a simplistic division between developed and developing countries.
For years, global climate change policy was hobbled by this division. In the Kyoto Protocol — the international agreement to reduce greenhouse-gas emissions — only developed countries committed to mandatory emissions reduction. Developing countries had no obligations. The stark demarcation made meaningful progress impossible, partly because the growth in emissions since the protocol came into force in 2005 has been entirely in the large developing countries. Moreover, even if developed countries were to eliminate their C02 emissions completely, the world cannot keep global warming under two degrees centigrade unless China, India, Brazil, Korea, South Africa, Mexico, and Indonesia take meaningful action.
The WTO negotiations, launched in 2001 in Doha, remain at an impasse because of similar problems. The negotiations are tied up because nearly all the obligations assumed by WTO members depend upon whether they claim to be developed or developing. And since countries are allowed to self-designate, Singapore, Israel, South Korea, and the Gulf oil states seek to be treated the same as Ghana, Zambia, and Pakistan.
When developing countries accounted for a relatively small share of world trade, it was easy to grant all of them "special and differential treatment." But it has become impossible for developed countries to agree to additional liberalization without meaningful market-opening concessions by the large emerging economies, which will account for the majority of world trade growth in the years to come. Even though they have already liberalized unilaterally, many of these countries currently avoid making concessions at the WTO by claiming treatment as developing nations. Moreover, even those prepared to make concessions find it politically difficult to break ranks.
In the climate arena, the big break came in Durban, South Africa, in 2011, when countries agreed to achieve an outcome that carried legal force and was applicable to all parties. In Paris this week, they will adopt a new hybrid international climate policy architecture that includes: bottom-up elements in the form of "Intended Nationally Determined Contributions,'' national targets and actions that arise from domestic policies and circumstances; and top-down elements for oversight, guidance, and coordination. Now all countries will be involved in protecting the climate system "on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities."
Whereas the current commitment period of the Kyoto Protocol covers countries (Europe and New Zealand) that account for no more than 14 percent of global emissions (and 0 percent of global emissions growth), Intended Nationally Determined Contributions have already been submitted for the Paris agreement by 180 of the participating 196 parties, representing fully 95 percent of global emissions. This is a dramatic, pathbreaking expansion of the scope of participation, and is the key reason for optimism about the promising new approach being taken in the Paris climate talks.
In the trade sphere, a similarly nuanced approach with "differentiated responsibilities that reflect different capabilities" should be adopted by the WTO. Instead of all countries having to subscribe as either developed or developing countries, the WTO can finally move beyond the North-South divide that is embodied in almost every draft proposed in the current Doha round. The round may need to be terminated, and then newly launched with new guidelines.
The climate talks have shown that simplistic classifications of countries are a prescription for impasse. Unless the WTO learns this lesson, it may become increasingly irrelevant, as coalitions of the willing turn to regional agreements to make what progress they can on international trade liberalization.
Robert Lawrence is professor of international trade and investment at the Harvard Kennedy School, and served as a member of the President's Council of Economic Advisers from 1998 to 2000. Robert Stavins is professor of business and government at the Harvard Kennedy School, and has served as a lead author of the Intergovernmental Panel on Climate Change since 1993.