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Trade rules and climate change subsidies

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  • GREEN, ANDREW

Abstract

Countries can choose between a wide range of policy instruments to address climate change. While economists tend to argue for the efficiency of instruments such as environmental taxes, many countries are incorporating subsidies into their plans for limiting greenhouse gas emissions. However, these subsidies may conflict with World Trade Organization rules. This paper analyzes the potential benefits of using climate change subsidies in terms of addressing market failures as well as the risks of protectionism arising from such subsidies. It then examines World Trade Organization rules to determine whether they optimally differentiate between beneficial and harmful subsidy policies. It concludes that existing WTO rules do not provide adequate scope for legitimate subsidies and makes suggestions for reforming subsidies law.

Suggested Citation

  • Green, Andrew, 2006. "Trade rules and climate change subsidies," World Trade Review, Cambridge University Press, vol. 5(3), pages 377-414, November.
    • Handle: RePEc:cup:wotrrv:v:5:y:2006:i:03:p:377-414_00
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    Cited by:

    1. Fischer, Carolyn & Fox, Alan K., 2009. "Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates," RFF Working Paper Series dp-09-02, Resources for the Future.
    2. Steve Charnovitz, 2014. "Green Subsidies and the WTO," RSCAS Working Papers 2014/93, European University Institute.
    3. Charnovitz, Steve, 2014. "Green subsidies and the WTO," Policy Research Working Paper Series 7060, The World Bank.
    4. Aaditya Mattoo & Arvind Subramanian, 2013. "Four Changes to Trade Rules to Facilitate Climate Change Action," Policy Papers 21, Center for Global Development.
    5. Thomas L. Brewer, 2010. "Trade Policies and Climate Change Policies: A Rapidly Expanding Joint Agenda," The World Economy, Wiley Blackwell, vol. 33(6), pages 799-809, June.
    6. Fischer, Carolyn & Fox, Alan K., 2012. "Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 199-216.
    7. Mattoo, Aaditya & Subramanian, Arvind, 2013. "A"greenprint"for international cooperation on climate change," Policy Research Working Paper Series 6440, The World Bank.

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