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New Zealand has proposed a five to seven year moratorium that would stop World Trade Organisation disputes challenging certain climate change policy.
Speaking at the Royal Institute of International Affairs at Chatham House in London last night, where he is engaged in bilateral meetings ahead of the Copenhagen Summit, Trade and Associate Climate Change Minister Tim Groser said the moratorium would allow space to implement climate friendly policies.
It would also explicitly rule out unilateral border tax adjustments – a very bad idea likely to spark a trade war, he said.
European countries and China have said they would retaliate against the US if it tried to do this.
The tax adjustments – proposed to counter ‘leakage’ or the risk of reducing competitiveness and the loss of jobs and production to countries that do not face a price on carbon – could in theory protect against imports that are not subject to a price on carbon.
But the problem was in distinguishing between compliant and non-compliant countries, he said.
The Kyoto concept of a final audit of compliance at the end of the commitment period was likely to survive (into the second commitment period starting in January 2013) and New Zealand would not know whether it met its Kyoto obligations until 2014, when a definitive audit of all countries with a ratified Kyoto agreement was finished.
World Trade Organisation (WTO) and the United Nations Framework Convention on Climate Change (UNFCCC) issues were complex, but both needed to be advanced with a practical solution, Mr Groser said.
While he was confident of a “one agreement, two steps” negotiating scenario at Copenhagen, expectations of what could be achieved were left “terribly late” and the real scenario was highly confused.
But an agreement built on key Kyoto concepts with any political or environmental integrity had to be based on domestic policy to counter climate change and an appreciation of the hard facts.
Mr Groser said the US made the mistake in Kyoto of agreeing to targets without a domestic policy base, but was adamant it would not happen again.
“This is not an international beauty contest where some emissions reduction figure is picked out of the air and doubled to international applause from rock stars and other glitterati, only to find out later that no one had a clue how to effect it.”