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National Measures, Trade and Competitiveness

National Measures, Trade and Competitiveness. Post Bali: A Dialogue on Trade, Climate Change and Development Dialogue organized by UNEP February 11, 2008 Geneva Aaron Cosbey, IISD. National Measures. Subsidies Tax measures Green government procurement Carbon taxes; cap & trade schemes

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National Measures, Trade and Competitiveness

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  1. National Measures, Trade and Competitiveness Post Bali: A Dialogue on Trade, Climate Change and Development Dialogue organized by UNEP February 11, 2008 Geneva Aaron Cosbey, IISD

  2. National Measures • Subsidies • Tax measures • Green government procurement • Carbon taxes; cap & trade schemes • Standards (e.g., efficiency standards) • Product bans • R&D spending, technology cooperation • Energy policy measures

  3. Available at: www.iisd.org/pdf/2007/ climate_trade_competitive.pdf

  4. Defining the Problem • Competitiveness is meaningless when it is used at the level of the nation state. At that level we should just talk about productivity. • We will use it at the level of firms or sectors

  5. Two types of concerns • The non-Party problem: competitiveness issues arise because non-Parties don’t impose standards on their firms, sectors • The implementation problem: competitiveness issues arise when Parties favour firms or sectors in implementing their commitments

  6. The non-Party Problem • Paucity of research in this area • Look at the rich body of pollution haven literature: • Does stringent regulation reduce market share? • Does stringent regulation affect investment decisions? (greenfield investment or migration)

  7. Early studies found little impact, and pollution related costs at 2 – 3% of total costs. • Poor methodologies though, e.g.: • Cross-sectional rather than panel data analysis • Aggregated analysis rather than sectoral analysis

  8. Final answer? • There are competitiveness impacts, on market share and on investment decisions. • In most cases these are quite moderate. • In specific sectors, they can be considerable. • Need a sectoral analysis.

  9. Which Sectoral Characteristics Matter? • Energy intensity • The ability to pass along cost increases to consumers • Opportunities for abatement (technology)

  10. Policy implications • At firm level: boost ability of firms to innovate – standard competitiveness policy • Sectoral level: need for sectoral research to identify vulnerable sectors, design policy accordingly

  11. Policy implications, national level • Reduce burden to be shouldered, e.g. through energy efficiency, conservation, renewables policies • Regulatory design to include flexibility (e.g., market mechanisms) • Trade measures

  12. Policy implications, international level • International agreement on targets for all • International agreement on common approaches (carbon tax, for example)

  13. Aaron Cosbey International Institute for Sustainable Development acosbey@iisd.ca

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