The run up to December’s United Nations Framework Convention on Climate Change (UNFCC) Conference of the Parties (COP) at Durban, South Africa is throwing up for discussion some significant view points from countries on the issue of impact on trade due to climate measures adopted by countries.
Since the discussions and the ensuing agreements – if any – will have a considerable impact on industry, it is important to understand the implications of the ongoing discussions and friction between various countries.
One significant area of friction has been the discussion on the response measures of countries in mitigating carbon emissions. A group of 26 countries, including India, has recently come together to protest against the move by the 27-nation European Union (EU) to charge a carbon tax on airlines for entering EU skies. Though Brussels has reiterated that the levy would be based on other nations meeting the EU laws, countries including India have slammed the EU regulation stating that is discriminatory and in violation of international law.
Interestingly, this is not an issue of developing versus developed countries. Even the US has joined the 26-nation group at the meeting in New Delhi, comprising China and Russia, among other countries. This issue is now expected to be discussed at the next meeting of the International Civil Aviation Organisation, a United Nations body, in November.
Specifically on the COP, India has been reportedly interested in adding some important points like Intellectual Property Rights (IPRs) and unilateral trade measures for discussion at the 17th COP at Durban. The main debate here is that countries like India are of the view that there is a need for greater access to climate-friendly technologies so that the targets for meeting climate-change goals are met. There has been considerable debate on the issue of how a balance can be arrived for ensuring that developing countries have access to costly environmental technologies that are protected by IPRs.
The question has been that should these products be treated as public goods. This will definitely create considerable debate since companies and countries that research and develop these technologies are of the view that by making these products public goods, the enthusiasm to create such products may be lost.
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One possible solution may be to create a global fund that can be accessed by needy countries for buying these products. This option is under study. There is a need for looking at some innovative measures for ensuring that technology is easily available at reasonable cost to developing and least developed countries without taking away the recognition of IPR to companies and individuals who create these products.
Unilateral trade measures to protect the environment are another area of interest to developing countries. There is a growing concern that countries are and will adopt unilateral measures that will hurt trade of goods across countries. There is, therefore, an urgent need to agree on some basic guidelines that countries need to follow before coming up with any trade measure based on climate needs that hurt the flow of goods.
Some regulations on products that have been adopted in the recent past by developed countries have already added to compliance costs for companies in developing countries. Even as governments will continue to look at means to put in place measures to stop unilateral trade measures, it will be important for industry to constantly keep a strict watch over the developments in important markets to ensure that climate policies do not hurt trade.
Though measures to mitigate climate change have to be on top of the agenda for all countries across the globe, there is a need to ensure that they do not end up becoming a market access or a trade barrier tool for some countries.
It is an acceptable argument that technology will come at a cost, but it is also important that when technology has to meet a larger global good then it must be available easily at competitive prices. This can be achieved through better innovative measures that protect the inventor’s rights, while ensuring that poor nations can afford to use that technology.
The next two months to Durban will be crucial for developing some innovative thought on meeting the needs of various countries for mitigating the impact of climate change. The relationship between trade and environment remains delicate and it is important to ensure that they do not hurt each other’s interests.
The author is Principal Adviser with APJ-SLG Law Offices