As the world considers how to respond to the Trump Administration’s decision to withdraw from the Paris Climate Agreement, it may wish to consider the adoption of a border carbon adjustment scheme that is compatible with international trade law as one, but not the only, possible policy response. The EU and China have already indicated that they will work together to strengthen the Paris Agreement, and have been quietly forming a group of like-minded states whom they will work with in coordinating a response, although they may encounter difficulty working within a near-universal framework based on consensus (such as the UNFCCC framework, which gives every country a veto). In particular, world policymakers will wish to consider adopting policy responses that disincentivise further withdrawals from the Paris Agreement causing a “domino effect,” and that incentivise voluntary participation by US states, cities and industries. World policymakers will also wish to incentivise the ratcheting up of commitments both to the reduction of carbon emissions and to international climate funding in order to make up the shortfalls caused by US withdrawal. World policymakers will also have to be aware about the possibility that US may attempt to play a spoiler role in UN negotiations,...
Written by Brian Chang