Overview. Questions about the interface between the multilateral climate regime embodied in the Kyoto
Protocol and the multilateral trade regime embodied in the World Trade Organisation (WTO)
have become especially timely since the fall of 2001. At that time, ministerial-level meetings
in Marrakech and Doha agreed to advance the agendas, respectively, for the implementation
of the Kyoto Protocol and for negotiations on further agreements at the WTO. There have
been concerns that each of these multilateral arrangements could constrain the effectiveness
of the other, and these concerns will become more salient with the entry into force of the
Kyoto Protocol. There are questions about whether and how the rights and obligations of the
members of the WTO and the parties to the Protocol may conflict. Of particular concern is
whether provisions in the Protocol, as well as government policies and business activities
undertaken in keeping with those provisions, may conflict with the WTO non-discrimination
principles of national treatment and most-favoured nation treatment.
The WTO agreements that are potentially relevant to climate change issues include many of
the individual Uruguay Round agreements and subsequent agreements as well. The principal
elements of the Kyoto Protocol that are particularly relevant are its provisions concerning
emissions trading, the Clean Development Mechanism, Joint Implementation, enforcement,
and parties’ policies and measures. In combination, therefore, there are numerous potential
points of intersection between the elements of the Kyoto Protocol and the WTO agreements.
Previous studies have clarified many issues, as they have focused on particular aspects of the
regimes’ relationships. Yet, some analyses suggest that the two regimes are largely
compatible and even mutually reinforcing, while others suggest that there are significant
conflicts between them. Those and other studies are referenced in the ‘suggestions for further
reading’ section at the end of the paper.1
The present paper seeks to expand on those studies by providing additional breadth and depth
to understanding of the issues. The analysis gives special attention to key issues on the agenda
– i.e. issues that are particularly problematic because of the likelihood of occurrence of
specific conflicts and the significance of their economic and/or political consequences. The
paper adopts a modified ‘triage’ approach, which classifies points of intersection as (a) highly
problematic and clearly in need of further attention, (b) perhaps problematic but less urgent,
and (c) apparently not problematic, at least at this point in time.
The principal conclusions are that:
· The missions and objectives of the two regimes are largely compatible, and their
operations are potentially mutually reinforcing in several respects. · Some provisions of the multilateral agreements that may superficially seem at odds are
not likely to become particularly problematic in practice.
· ‘Domestic policies and measures’ that governments may undertake in the context of
the Protocol could pose difficult issues in the context of WTO dispute cases.
· Recent WTO agreements and dispute cases acknowledge the legitimacy of the
‘precautionary principle’ and are thus consistent with the environmental protection
objectives of the Protocol.
· The relative newness of the climate regime creates opportunities for institutional
adaptation, as compared with the constraints of tradition in the trade-investment
regime.
· The prospect of largely independent evolutionary paths for the two regimes poses a
series of issues about future international regime design and management, which may
require new institutional arrangements.
In sum, the present paper thus finds that although there are some areas of interaction that are
problematic, the two regimes may nevertheless co-exist in relative harmony in other respects
–more like ‘neighbours’ than either ‘friends’ or ‘foes’, as Krist (2001) has suggested