Climate Change, Species Loss, and the WTO

A reader comment on Angry Bear on the climate change and environmental degradation was sufficiently articulate and well argued to be featured as a separate post. The writer Stormy makes a number of important points:

1. The IPCC Report is actually conservative; it doesn’t touch the issue of species die-off, already occurring at alarming levels and projected to accelerate.

2. The report also appears not to allow for the number of new coal-fired plants already planned or under development. The new plants in India, China, and the US alone will generate an additional 2.7 billion tons of CO2 by 2012. By contrast the Kyoto accords call for the participants to produce a collective 483 million tons that year. As you may know. coal is nasty not only for the CO2 it generates, but also the particulate matter, which produces acid rain downwind for considerable distances (oh, and also makes the air pretty crappy to breathe)

3. The WTO has established jurisdiction over environmental matters (they have arbitrated past disputes). They are likely to wind up being the forum for many more disputes (such as weather changes caused by a neighboring country) and could play a proactive role (although this is wishful thinking).

Stormy’s facts suggest the IPCC report has (probably unwittingly) understated the case. Other important bits of information, such as the rapid melting of the ice sheets on Greenland and Antarctica, have also not been factored into the IPCC report (a Wall Street Journal article describes why this is a serious issue). The long form of the IPCC report has yet to be released, but I also wonder if it incorporates the fact that, as the permafrost warms, methane is released, and methane is 24 times as potent a greenhouse gas as carbon dioxide (the release of methane played a major role in the mass extinction 180 million years ago). Yet the posture in the US is business as usual.

The post is long and worth reading in its entirety. Some key bits:

It is time for the WTO and economists, to take seriously the issues of global warming, environmental decay, and the depletion of resources. Most of us by now are familiar with the conservative IPCC report and its dire predictions for the coming centuries. Even Paul Volcker has stepped forward, saying:

First of all, I don’t think (such a step) is going to have much of an impact on the economy overall. Second of all, if you don’t do it, you can be sure that the economy will go down the drain in the next 30 years.

The IPCC report is only a small part of the iceberg leisurely cruising our way. For example, a recent study in the journal Science concluded that, if we continue are present rapacious appetites, fish stocks will crash by 2048….To date, there has been no substantive rebuttal to this peer-reviewed study….

Unless we change the way we do business, there is little hope. Business and trade are the twin epicenters of the coming earthquake. That earthquake will challenge traditional thinking about economics as nothing has before. The “externalities” of which economists speak will no longer be appendages to the discussion, or afterthoughts to be consider only by politicians. They will come marching to center stage, dominating and modifying even the principles of comparative advantage.

The WTO and the principles it enunciates, which seemed fair enough in a pre-21st world, are now inadequate. Countries petitioning for entry need not have any environmental regulations.

The WTO takes no formal position on the environment. Countries themselves may enter into such agreements, but the WTO prefers to remain neutral to such agreements. For disputes among WTO members, however, the actual wording of the position of the WTO is suggestive but allusive:

But if one side in the dispute has not signed the environment agreement, then the WTO would provide the only possible forum for settling the dispute. The preference for handling disputes under the environmental agreements does not mean the environmental issues would be ignored in WTO disputes. The WTO allows panels examining a dispute to seek expert advice on environmental issues.

To date, the WTO has entertained a number of environmental disputes: The “shrimp-turtle” and the “tuna-dolphin” dispute, oft cited examples. Both of these cases involved a single endangered species. The first involved a species of turtle that the U.S. had placed on the endangered species list. The U.S. required that “turtle excluder” devices be placed on shrimp nets. Because Malaysia, India, Pakistan, and Thailand did not use such devices, the U.S. put a ban on the importation of shrimp and shrimp products. The WTO ruled against the U.S. Again, its wording is both instructive and suggestive:

In its report, the Appellate Body made clear that under WTO rules, countries have the right to take trade action to protect the environment….The WTO does not have to allow them this right.

The U.S. lost the case, not because it sought to protect the environment but because it discriminated between WTO members… It provided countries in the Western hemisphere—mainly in the Caribbean—technical and financial assistance and longer transition periods for their fisherman to start using turtle-excluder devices.

Or, what if the pollution from one country actually starts to change the weather in another? (This is actually happening.) What if, in response, the offending country is then confronted with a tariff on its goods? Such was the suggestion of French President Chirac in response to U.S. pollution: A carbon tax, really a tariff on U.S. goods….

To lessen the coming issues, perhaps the WTO should insist that nations petitioning for entrance have environmental regulations more in line with its present members (China excluded, of course. That cat is out of the bag.)

These are tricky waters, but the WTO, unlike the U.N., has an intelligent and respected arbitration procedure that may indeed work….

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