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THE collapse of the Kyoto protocol could spark a trade war that would hit struggling Europe hardest and worsen global poverty, one of the world’s leading trade experts said yesterday.

Alan Oxley, a former Australian ambassador and chairman of the General Agreement on Tariffs and Trade, said the likely push for the erection of trade barriers to police carbon emissions in the wake of the demise of the Kyoto protocol would be self-defeating.

“Now it is clear the Kyoto protocol has failed, we should expect environmental NGOs to demand green trade barriers against imports from those who would not make the cuts proposed in the protocol,” Mr Oxley told a free-trade conference at the climate change summit in Durban.

“Unilateral trade barriers like this simply invite retaliation against EU exports, and the EU would be the biggest loser. I could not imagine the Trade Directorate of the European Commission relishing a trade war with India, China, Canada, the US and the developing countries.”

As the discussion sessions begin in Durban tonight (AEDT), the future of the Kyoto protocol and global climate change negotiations appears dire.

Developed countries – including Australia, Canada, Japan and the US – want to keep the focus on a new global agreement with binding targets for the developing nations.

But the developing countries, including China, want the developed world to recommit to a second round of Kyoto targets before they commit to binding reductions. The trade-off is millions of dollars of development and mitigation aid, which is being thrashed out in negotiations alongside the Kyoto talks.

Among developed nations, the Kyoto protocol, which once galvanised Labor’s climate change crusade, is being dismissed in Durban as a distracting “bauble” that has reached the end of its life.

Australia is not calling for the treaty to be scrapped but, together with the US, Japan and Canada, it will not be that concerned if the once-symbolic agreement is allowed to perish this week.

The challenge for negotiators at the high-level talks is to reach a form of words that saves face for the developing nations and delivers billions in development and mitigation funding, but that also continues to force global climate change talks on to a single binding pathway. The position was spelt out by US negotiator Todd Stern on Monday when he said: “Kyoto is not the be-all and end-all.” This is because Kyoto covers 17 per cent of global emissions and falling, while the parallel discussions that take in China and India account for 85 per cent.

“The end objective is to take action to reduce emissions,” Mr Stern said.

“We need to focus on taking real action, and that is happening now. China is dedicated to the target of a 40 per cent reduction in carbon intensity to 2020. India acted, South Africa acted, Brazil acted, so we have total of global emissions covered.”

If cutting global carbon emissions is the true objective, ditching Kyoto and concentrating on the new framework makes sense. But Kyoto remains highly symbolic in the developing world, where the politics of blame and shame against developed nations for using the world’s capacity to absorb CO2 remains strong.

The decision to hold the latest UN climate change talks in South Africa has played dramatically into the sense of entitlement of the developing nations.

The blame for unseasonal storms, failing crops, drying rivers, drought and flood is being sheeted home to climate change and therefore to the wealthy developed world.

African negotiators are determined that a second Kyoto protocol period must be set.

Seyni Nafo, spokesman for the African group of negotiators, said: “Developed country parties to the Kyoto protocol must honour their commitments through ambitious mitigation targets for a second and subsequent commitment periods.

“They must reduce their emissions of greenhouse gases by at least 40 per cent during the second commitment period from 2013 to 2017, and by at least 95 per cent by 2050, compared with 1990 levels, as an equitable and appropriate contribution.

“We stress the urgency of agreeing a second commitment period in Durban, and of elaborating measures to avoid a gap between the commitment periods.”

Mr Oxley said there was a danger the failure of the talks in Durban could spark retaliation in global trade. The first signs were already there with airline fuel levies and import restrictions.

“Trade sanctions are proposed because some countries still wish to proceed to implement costly domestic measures to reduce emissions,” he said.

“And instead of bearing the full cost themselves, they seek to pass some of that cost to trading parties, in most cases the very ones who objected to the idea of a globally binding target.”

He said proposing mechanisms to adjust or ignore the rules of WTO agreements would be self-defeating because it ignored the reason the measures were proposed in the first place.

The talks had failed because there was no global consensus among UNFCCC parties to adopt co-ordinated and regulated targets to reduce greenhouse gas emissions.

A report prepared by World Growth, chaired by Mr Oxley, said: “Trade sanctions are proposed because some countries still wish to proceed to implement costly domestic measures to reduce emissions; and instead of bearing the full cost themselves, they seek to pass some of that cost to trading parties, in most cases the very ones who objected to the idea of a globally binding target.”

It said while wealthy economies considered they could afford the cost of reducing emissions, that was a questionable proposition.

“Economies need to generate wealth to meet the cost,” it said.

“Reducing economic growth as a way of meeting the cost is a strategy of impoverishment.”

The report said a multi-track approach where countries laid out aims and selected the most appropriate track for their nation was the best way to break the negotiating deadlock.

The Australian, 7 December 2011