Climate Change, Regulatory Policy and the WTO: How Constraining are Trade Rules?

Abstract

Climate change has come to be seen as a major global environmental challenge. This paper examines the extent to which WTO rules constrain countries' ability to address climate change through domestic regulatory policies such as standards, labels, voluntary agreements and domestic emissions trading programs. In particular, it examines three broad types of constraints. First, it discusses the extent to which domestic regulatory measures may conflict with national treatment provisions of GATT and the Technical Barriers to Trade Agreement. Second, it discusses procedural constraints on domestic regulatory action, including from requirements related to scientific evidence. Finally, it discusses the "necessity" or least restrictive means tests under GATT and the TBT Agreement. The paper argues that existing WTO rules provide members with some scope to take action on climate change. However, they do constrain domestic regulatory policy and the debate about future institutional changes will be central to how effectively global environmental issues such as climate change will be addressed.