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"Trade Could Hold the Key to a Climate Deal"

Russian President Vladimir Putin announced the signing of a protocol with the EU backing Russia’s WTO accession in Moscow, May 21, 2004. Putin said Moscow in turn would speed up ratification of the Kyoto protocol.
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"Trade Could Hold the Key to a Climate Deal"

Op-Ed, Financial Times

December 3, 2009

Author: Bard Harstad

Belfer Center Programs or Projects: Harvard Project on Climate Agreements


"Our leaders' recent confession that a legally binding climate agreement is not feasible this year may be no bad thing. The hope is that the new goal for December — to reach a broader "political agreement" — will establish a better foundation for a future climate deal than we currently have.

This is important, since a climate agreement currently faces three significant obstacles. To overcome these, there might be no solution other than to link any deal to new and existing trade agreements.

The first challenge is to encourage participation in a climate agreement. The problem is that while participating countries bear the costs of reducing their own emissions, countries that chose to opt out can nevertheless benefit from these reductions and, in addition, from a lower fossil fuel price when the participating countries reduce their demand.

The Kyoto Protocol failed to motivate the US, as well as big developing countries, to take part. But Russia ratified Kyoto after the European Union promised to support its admission to the World Trade Organisation. Clearly, some carrot is needed to motivate participation, and being a favoured trading partner is one of the few powerful incentives that can realistically be offered in international politics. Alternatives such as conditional development aid might be held out to the poorest, but explicit transfers to other countries would be politically unacceptable...."

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The writer is an associate professor at Kellogg School of Management, Northwestern University and a contributor to the Harvard Project on International Climate Agreements


For more information about this publication please contact the Harvard Project on Climate Agreements Coordinator at 617-496-8054.

Full text of this publication is available at:

For Academic Citation:

Harstad, Bard. "Trade Could Hold the Key to a Climate Deal." Financial Times, December 3, 2009.

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