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Trade, Growth, and Green
1. ‘
‘ Global Themes
an issues brief series of the Dallas Committee on Foreign Relations
DCFR
Dallas Committee on Foreign Relations
Issue No. 2 June 21, 2011
Trade, Growth, and Green
Rising to 21st Century Challenges
“We are the leading trading nation in world, and therefore we stand to profit the
most from a successful conclusion to the Doha Development Round. We need
Globe Trade Advances Under Doha to make a successful conclusion a much higher priority.”
The Doha Development Round is the
JW: What should the U.S. be doing With respect to Colombia, for
current trade-negotiation round of the
with regard to the Doha Development example, ninety percent of
World Trade Organization(WTO), Round? Colombian shipments are already
which began in November 2001. duty free with current trade
As of 2008, talks have stalled over Bacchus: What we are missing most agreements. However, what we sell
a divide on major issues, such as of all is political will, in the United to the Colombians now faces many
agriculture, industrial tariffs and States and elsewhere, to make Doha tariff and non-tariff barriers. Many
non-tariff barriers, services, and the global priority it ought to be. of these barriers will be eliminated
trade remedies. The most significant Countries should make the national over time if we conclude the pending
differences are between developed decisions necessary within an agreement. While the U.S. dithers
nations led by the European Union, international context to put together politically, Canada, Europe and
the U.S., and Japan and the major a global deal. The rest of the world others are concluding trade deals
is looking to the U.S. for leadership. with a country that is a strong ally
developing countries led and
It’s not clear whether we will be and long-standing trading partner of
represented mainly by Brazil, China, able to summon the political will ours. Right now China is building
India, South Korea, and South needed to lead. Before proceeding a railroad from the Pacific to the
Africa. The Doha Round began with with Doha, given our domestic Caribbean in cooperation with the
a ministerial-level meeting in Doha, politics, we need to clear from our Colombians to facilitate trade
Qatar in 2001. Subsequent ministerial agenda three long-delayed pending between Colombia and China.
meetings took place in Cancun, free-trade agreements, the Korean,
Mexico (2003), and Hong Kong Colombian and Panamanian free-
(2005). Related negotiations took trade agreements. They would all add
place in Geneva, Switzerland (2004, significantly to growth of the U.S.
2006, 2008); Paris, France (2005); economy at a time when we much On June 8th, DCFR President Jennifer
and Potsdam, Germany (2007). The need it. Approving these agreements Warren interviewed former chairman of
most recent round of negotiations in would produce jobs in the U.S. that the appellate body of the WTO, James
would pay more and last longer than Bacchus. He currently leads the global
July 2008 broke down after failing to
jobs not involved in international practice at Greenberg Traurig. The
reach a compromise on agricultural
trade. brief’s content is predominantly based
import rules.
on his comments.
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2. 2
Once we conclude these pending We are the leading trading nation Africa, for the next round of climate
free-trade agreements, we can in world, and therefore we stand to change negotiations in December.
focus politically in the U.S. on the profit the most from a successful One of our recommendations is to
multilateral negotiations that have conclusion to the Doha Development enact climate measures nationally
been at an impasse for years. Our Round. We need to make a that are consistent with WTO
economic opportunities are much successful conclusion a much higher obligations to avoid a collision
greater multilaterally than bilaterally priority. course between trade and climate
to produce jobs and economic change in WTO dispute settlement.
growth. Under the rules of WTO, We also consider how the trading
any concessions that are negotiated system can be used affirmatively
by one country are then multi- Trade and Greenery to combat climate change and
lateralized. This “multilateralizing” promote green growth worldwide.
multiplies the opportunity to lower New thinking suggests that WTO One important recommendation
trade barriers and is by far the best rules can be used proactively to is to lower and eliminate trade
way to increase the overall volume allow for more green trade. By barriers on environmental goods and
of trade, thus expanding the potential using WTO rules, climate-friendly services globally. This is already an
for global prosperity. This potential technologies can be made more important item on the Doha agenda.
cannot be underestimated. Over accessible to developing countries Additionally, we look at ways to
the past half a century, by lowering for energy efficiency and to adapt to protect intellectual property and how
barriers to trade and investment, we and mitigate climate change effects. to encourage its dissemination to
have added $1 trillion annually to Areas that are at-risk for negative help developing countries combat
the U.S. economy. If we eliminated climate change effects include energy,
all remaining barriers to trade and
investment world-wide, we would
add another $500 billion per year to
the U.S. economy.
Where do we find the political will?
The rest of the world is willing
to make additional concessions
to the U.S. to lower barriers to
manufacturing trade and trade
in services. We also want trade
facilitation to eliminate red tape. All
this is rightly on our agenda.
Other countries are willing to give
us more, but we must be willing to
give them more in return. They want
market access in the U.S. where
they have a comparative advantage. water, agriculture, and infrastructure. climate change while also ensuring
Many countries around the world Lowering or eliminating barriers to the continued protection of IP
have a comparative advantage in green goods and services would help rights. Another recommendation
agriculture. They want us to reduce in their being diffused globally. suggests creating an exception in
our agricultural subsidies that distort
JW: What is at the top of the agenda
WTO rules for green subsidies.
and protect our markets. But it’s
for the Davos working group on trade Such an exception existed in WTO
politically difficult to reduce these
and climate change for which you rules initially but lapsed when WTO
in the U.S. They want us to redress
chair? members failed to extend it in Seattle.
how we deal with imports and
WTO Members should revisit this
how we apply trade remedies more
JB: We produced a report with a issue to reach consensus to allow new
extensively than we should. This
number of specific recommendations. green subsidies without distorting
concession too would be politically
These recommendations are acquiring trade worldwide. This means drawing
difficult for us. But if we want more
some currency in the councils a line; we must draw it in a way that
from Doha, we must give more. The
of the WTO and in discussions is compatible with continuing trade
biggest hurdles are our inabilities
to make concessions on agriculture among climate negotiators who and also with addressing climate
subsidies and trade remedies. will be heading to Durban, South change.
3. 3
Climate Change, Forests, and “The rest of world is baffled that the US—a scientific society invested in the sci-
Green Trade entific method and in the application of scientific findings to new technologies—
is somehow resisting scientific evidence on this critical human issue.”
Reducing Emissions from
Deforestation and Forest Degradation emerging economies in part because law and in the potential for the
(REDD) is a set of steps designed we remain significantly more energy international rule of law for helping
to use market/financial incentives efficient than they are. But we can’t us address concerns that can only
in order to reduce the emissions of be content with that. We need to be resolved globally. Foremost of
greenhouse gases from deforestation find better ways to become more concern to me is climate change. It
and forest degradation. The initiative energy efficient. We won’t find those is inherently a global issue requiring
also can deliver “co-benefits” such as methods and innovations unless we global actions, and thus we need
biodiversity conservation and poverty proceed from the necessary premise global rules. From Copenhagen’s
alleviation. that climate change is real, it is man- outcome, it is apparent we will
made, and we have to deal with it not magically and suddenly have
REDD is presented as an “offset”
on those terms. The vast majority a comprehensive global treaty on
scheme of the carbon markets and
of major America businesses that climate change. We have to build
thus, will produce carbon credits.
do not have a stake in the status an architecture over time to address
Carbon offsets are “emissions-saving
quo have already acknowledged climate change on a global basis.
projects” that in theory “compensate”
and internalized this and are acting REDD is one very good practical way
for the polluters’ emissions. The
on this premise. It is imperative to do so.
“carbon credits” generated by these
our politicians do the same. It is
projects can be used by industrialized So I have focused on forest issues
especially imperative that they do so
governments and corporations to in a shared global effort with many
because around the world countries
meet their targets and/or to be traded others of like mind to begin to build
and citizens everywhere else are
within the carbon markets. from the forests up the global legal
doing so. The rest of world is baffled
that the US—a scientific society architecture we need to address
“Between 15% and 20% of all
invested in the scientific method climate change. We hope we can
greenhouse gases worldwide result
and in the application of scientific build on the REDD and other similar
from deforestation -- an amount equal
findings to new technologies— is initiatives to create a comprehensive
to the emissions of all the world’s
somehow resisting scientific evidence global effort to address climate
cars, trucks, trains, ships, and planes
on this critical human issue. change over time. This is a practical
combined,” writes Bacchus in a
approach, and an incremental
recent article. REDD is expected
JW: Can REDD be a building block approach. It took us half a century
to play a crucial role in a future
for a comprehensive climate change to evolve GATT (the General
successor agreement to the Kyoto
treaty? How? Agreement on Tariffs and Trade) into
Protocol, the soon-to-expire global
the WTO. The world trading system
climate change treaty. JB: I went to the WTO for two is still not where it ought to be. We
reasons. First, I believe in the are continuing to build incrementally
JW: How can the U.S., or its
potential of trade for promoting in trade. An all-too-real challenge
politicians, ignore the fact that
freedom globally. There is a is that we don’t have a lot of time for
Norway will spend $1 billion for
connection between free trade, incrementalism in climate change; so
Indonesian forest conservation
freedom, and advancing prosperity. we have to get to work yesterday.
efforts? What are the dynamics
Second, I believe in the rule of
hampering U.S. adoption of
progressive climate change
initiatives?
JB: We need to ensure our energy
supplies and improve our energy
efficiency if we hope to be more
competitive in this new world in
which we find ourselves. Essentially
this is an issue of environmental
protection but also economic
competition. It’s a jobs issue. We
have a significant comparative
advantage over China and other
4. 4 June 21, 2011
JW: Is there a country or group of Food insecurity is creating the The Smith and Ricardo views of the
countries that can most effectively increasing trend of many countries world remain accurate. It is important
further and encourage a green trade imposing restrictions on exports. to keep this in mind as the world’s
agenda at this point? This is shortsighted, self-defeating countries confront the reality that we
and ultimately suicidal economics. do have limited natural resources. We
JB: My view is that all countries must But there is a political temptation must find greater efficiencies and the
be engaged, but clearly the biggest to impose these export restrictions fairest ways to allocate our resources
emitters are the ones that can make all over the world. It’s happening in to feed, sustain and advance a global
the biggest difference. If the top food, commodities, raw materials, population that will soon number nine
emitters could get working on this and rare earths. billion.
and reach consensus it would advance
us further. We are not quite there yet China is imposing restrictions on JW: How do you see this tension
on the biggest emitters [laughs of exports of rare earth elements, between population growth and
irony]. which are the basic ingredients of finding balance in prosperity?
our technological society. It makes
no sense for them to do this because JB: I am not a Malthusian. Human
the Chinese are heavily dependent ingenuity can create all kinds of ways
Food Security to serve a growing population. The
on exports from other countries to
Food insecurity has proven to fuel their continued growth. If China Green Revolution in agriculture in the
have potentially destabilizing restricts exports that are needed post-war era is one such example. I
consequences. It played a role in elsewhere, what is to stop China’s have faith in our ability to make the
the uprisings in Tunisia, Egypt trading partners from reciprocating? global pie larger in a world in which
and elsewhere. Food is now a geo- It is ultimately self-defeating because resource constraints will become
political issue like never before. no one country is self-sufficient in ever more a factor; but we have to be
Rising food prices push citizens of everything. smart about doing it. We will have a
developing countries further toward brighter economic future only if we
poverty. Domestically, rising prices The opportunities in global growth have a sustainable approach to the
catalyze leaders to take protective come from dividing and sub-dividing future. We must protect and make the
measures that have unintended the division of labor that creates the most of our limited natural resources.
consequences domestically and wealth of nations. This is not me We must be smart about how we
globally as interconnected trade saying this; it is Adam Smith. The apply our technologies. I don’t think
and markets become distorted. best way forward is for each country we are doing that in all the ways we
Agriculture trade is one of the most to pursue its comparative advantage should.
contentious issues in the WTO. in what it does relatively better than
other countries. Again, this is not
JW: What do you think is the best path me; this is David Ricardo talking.
forward for addressing food security
issues?
JB: Increasingly I’m working with
others around the world of like mind
on the nexus of trade, climate change,
food, energy, agriculture and a variety
of other issues related to the reality of
our all-too-limited natural resources.
One such area of our concern is
water. Water is simultaneously a
climate, food, energy, agriculture, and
trade issue. Soaring food prices and
volatility have all kinds of societal
consequences. They played a role in
the Arab spring and are driving up
inflation globally even as we speak.
They contribute to a dangerous
and self-destructive trend toward
economic nationalism globally.
5. 5
Chinese Rare Earths and Trade JW: With regards to China’s China, however, could do much more
restrictions of rare earths exports, is to be consistent and comply with
China began restricting its export of this a sign of the times or will China WTO rules, particularly in the area
rare-earth elements, partially after reverse it course? of intellectual property. The U.S.
a row with Japan last year. These International Trade Commission
restrictions are said to be in violation JB: China has acted responsibly as a released a study recently, which
WTO member. Domestically, it has concluded that we could create 2.1
of WTO rules. China holds about
competing interests. The Chinese million more jobs in the United States
half of the world’s supply of rare
have complied with WTO obligations if China complied fully with all of
earths and produces about 93% of when they have been found violating its existing WTO obligations relating
the world’s supply. It has created them. This cannot always be said to patents, copyrights, trademarks,
vulnerability for those countries and about other countries, including our and other IP rights. So I encourage
firms importing rare earths that are own. This week the Chinese decided the U.S. to be more aggressive in
essential in many high-tech products to eliminate some discriminatory insisting on compliance by China,
such as mobile phones and batteries subsidies in their wind power including continued and increased
for hybrid cars. A recent article cites: industry, in response to a complaint use of WTO dispute settlement. This
“However, rising prices fit neatly by the United States. is one part of meeting the overall
with China’s ambition to end its role challenge of finding ways to advance
as supplier of cheap rare earths to the I personally represented the U.S. the cause of trade without resorting to
entertainment industry in two WTO the false promise of protectionism.
world. As Mr. Lin of the Rare Earths
cases brought by the United States
Society says: “Prices of gold, oil and against China that involved Chinese Written by Jennifer Warren, President of DCFR
other commodities are all high. Why copyright piracy of music, movies
should the cost of rare earths not be and books. We won those two cases,
high, too?” and now the Chinese are complying
with their WTO obligations.
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