WTO To Face U.S.-E.U. Kyoto Dispute

WTO To Face U.S.-E.U. Kyoto Dispute

Horner Op-Ed in The Washington Times
September 21, 2002

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The Kyoto Protocol was not formally on the agenda at the Johannesburg “World Summit on Sustainable Development”.  Russia – one of only two countries now able to dictate Kyoto’s fate – nonetheless made news by declaring, again, that it will soon ratify Kyoto.  This announcement, combined with European Union threats, provides a call for the Bush administration to recognize looming repercussions.


If Russia ratifies, Kyoto goes into effect against nations voting to accept it.  The EU have made clear their intent, either through Kyoto or otherwise, to extract Kyoto-style economic pain from the U.S. (which remains a non-ratifying signatory).  They apparently intend to claim that all U.S. goods are impermissibly subsidized by America’s refusal to adopt Kyoto-style energy taxes. Such an “eco-dumping” campaign would force the pro-growth World Trade Organization (WTO) and anti-growth multilateral environmental agreements (MEAs) such as Kyoto.  It would also represent a landmark battle over the freedom of states to refuse to adopt the policies of others, without incurring penalty for unfair trade practice.


Further, this will expose the Bush Administration’s curious refusal to withdraw from Kyoto -- as it did from the Rome Treaty or International Criminal Court -- which as a matter of law hobbles the U.S. ability to defend itself.


As for EU retaliation against the U.S. for not ratifying Kyoto, the Europeans face two choices. First, they could attempt border adjustments against nations not meeting a Kyoto-style greenhouse gas (GHG) reduction scheme or profile. However, this would include the 140 states bearing no obligations under Kyoto, because to single out the U.S., or even “Annex I non-ratifying signatories” on its face violates WTO rules. The EU’s ability to defend such a scheme is further complicated by the fact that with the temporary exceptions of Germany and the United Kingdom, no EU nation is Kyoto-compliant.


The EU will instead likely approach the WTO with a complaint. Doubtless accompanied by specious claims of scientific certainty, etc., their plea would be that the U.S. refusal to follow the EU’s greenhouse gas (Kyoto) path constitutes impermissible protectionism: “If we choose to adopt certain ‘responsible’ policies, [the U.S.] can’t fairly sit there and not follow suit.” Incredibly, the WTO has indicated a willingness to accept such an argument, also advocated by some as a path to “harmonize” the otherwise incompatible pro-trade and anti-energy pacts.

The WTO asserts founding principles of strengthening the world economy through increased trade, investment, employment and income growth. Kyoto is driven by the Intergovernmental Panel on Climate Change, which assails the developed world for “unsustainable lifestyles” and calls for imposition of regionalized, less consumptive economies. WTO claims its “overriding purpose it to help trade flow as freely as possible,” by eliminating barriers to increased productivity, trade and global economy.

Kyoto, on the other hand, restricts energy-use emissions, and penalizes parties who refuse to abide by energy use edicts.  Energy use is a solid measure of economic activity.  Despite being wrapped in “green”, therefore, Kyoto is in reality an economic instrument.  Kyoto's advocates desire debunking what they regard as the falsely conditioned mental connection between quality of life, or satisfaction, and increasing gross national product.  This represents the antithesis of globalization.

Reconciling the WTO and Kyoto requires involving economic and trade ministers, not merely environmental officials.  Lesser Developed countries overwhelmingly prefer the WTO’s pro-growth goals to the Kyoto agenda, despite the latter’s wealth transfers.  They know that only a prosperous West can ensure their own escape from poverty and dependence.  Now, their conviction is penetrating into the chambers of even some European governments long supportive of Kyoto. Germany's economic minister has spoken out against mindless carbon dioxide suppression.

Still, last year EU Environment Commissioner Margot Wallstrom revealed the mindset of the European policymakers. “[Kyoto] is not a simple environmental issue where you can say it is an issue where the scientists are not unanimous” she said. “This is about international relations, this is about economy about trying to create a level playing field for big businesses throughout the world.”  To the EU, Kyoto is about the U.S.’s “unfair tax competition”, its government consistently refusing to match the Europeans' zeal for taxing energy use to modify behavior, particularly repressing automobile use and population.

As a result, according to Yale University economist William D. Nordhaus, the U.S. not ratifying Kyoto “is likely to engender trade disputes because it widens the already large disparities in energy prices between Europe and the United States.”

Any treaty threatening the economic health of nations will ultimately collapse of its own potential harm, though not without first wreaking havoc.  As the Bush administration seeks to reshape U.S. foreign policy, one important step would be to abandon Kyoto once and for all, with its built-in appeasement of ideological extremists seeking to impede global prosperity.  To date, however, their abandonment has been purely rhetorical.

This is problematic because there is no doubt that both “customary law” (international common law) and Article 18 of the Vienna Convention on the Law of Treaties require a non-ratifying treaty signatory to communicate its withdrawal or be held to “not violate the treaty's purpose or objective.”  This is why the US withdrew from the ICC -- we could not, for example, object to the abduction of an ICC-indicted serviceman.  Similarly, this means we would likely be denied standing to object to EU retaliation or enforcement of Kyoto’s objectives.  That merely adds to the reasons why President Bush should finally and actually withdraw from Kyoto.  That act would, however, merely facilitate a fair fight in the looming battle over Kyoto, et al., before the WTO.