FES-Analyse Ökologische Marktwirtschaft International Trade Law and Climate Change – A Positive Way Forward Matthias Buck and Roda Verheyen July 2001 Executive Summary Parties to the UN Framework Convention on Climate Change(UNFCCC) will come together in Bonn from 16 to 27 July 2001 to finalise the rules for the Kyoto Protocol. The United States – the world’s largest emitter of greenhouse gases – will not actively participate in the negotiations but has decided to opt out of the international co-operation effort that the Kyoto Protocol represents. Instead, the US government has indicated that it will participate in the Bonn negotiations to en­sure that decisions taken by countries finalising the Kyoto Protocol do not infringe US rights under the international trade regime(WTO). WTO-concerns voiced in international environmental negotiations are usually not based on a sound legal assessment but rather serve the strategic purpose to exert a“regulatory chill” on more progressive governments to prevent them from taking meaningful decisions. The effective­ness of this“regulatory chill”-strategy is enhanced by the fact that diplomats and experts nego­tiating on climate change often only have a vague understanding of the international trade law relevance of their decisions. Against this background the paper clarifies and makes transparent the requirements of international trade law pertaining to climate change policies and shows the lack of credibility behind a“regulatory chill”-strategy. The analysis proceeds along a selection of important national and international climate policy measures that will likely be taken by governments to reduce greenhouse gas emissions and which might serve to prevent“free-riding” of other industrialised countries which decide to abstain from the adoption of such policies. For each of these measures we set out the minimum require­ments of international trade law governments have to be aware of when designing climate change programmes. The analysis reveals that in large part climate policy measures will not con­flict with international disciplines on trade(see main findings – Section IV of this paper). However, some uncertainties remain and in some cases measures desirable from a climate policy perspective will be incompatible with international trade law as it is interpreted and applied to­day. Herausgeber und Redaktion: Albrecht Koschützke, Stabsabteilung der Friedrich-Ebert-Stiftung 53170 Bonn, Tel.: 0228-883376, Fax: 883432, eMail: Albrecht.Koschuetzke@fes.de