Climate change and trade: challenges and lingering questions on the relationship between renewable energy subsidies and
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Climate change and trade: challenges and lingering questions on the relationship between renewable energy subsidies and WTO disciplines Leonardo S. Borlini1 • Francesco Montanaro1
China-EU School of Law 2017
Abstract The worsening of global warming has prompted an ever-increasing number of States to enact climate change mitigation policies. These often include renewable energy subsidies and local content requirements. Yet, these policies do not always sit comfortably with WTO disciplines. This paper investigates how the WTO case law and legal scholarship have dealt with this issue. Bearing this in mind, it seeks to contribute to this debate by putting forward a solution to reconcile renewable energy subsidies and WTO obligations. Keywords Subsidies Renewable energy WTO China EU Paris Agreement
1 Introduction The interplay between trade disciplines and environmental policies remains a largely unsettled question. Despite their limited number, environmental GATT/ WTO disputes have drawn a great deal of attention. Based on (neo)-liberal principles,1 the WTO rules, at first glance, do not seem sufficiently well equipped to safeguard environmental policy objectives. Yet, the Dispute Settlement Body has played an important role in accommodating environmental objectives.2 Since its 1
R. Howse, ‘‘The World Trade Organization 20 years on: Global governance by judiciary’’ (2016) 27 European Journal of International Law 9, p. 21. Cf B. Hoekman, ‘‘The world trade order: global governance by the judiciary’’ (2017) 27 European Journal of International Law 1083, 1084–1085.
2
R. Howse, ‘‘The World Trade Organization 20 years on: Global governance by judiciary’’, cit., 36–38.
& Francesco Montanaro [email protected] 1
Bocconi University, Milan, Italy
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L. S. Borlini, F. Montanaro
decision in the Shrimp-Turtle case, the AB has sought to untie itself from a strict pro-market logic to embrace a more balanced and sustainable view of trade liberalization.3 Moreover, WTO environmental disputes have gradually changed their nature. Whilst in the GATT era and in the early years of the WTO these disputes concerned the interaction between trade liberalization rules and domestic measures imposing environmental requirements,4 in recent times they are occasioned by measures aimed at promoting the development of specific green economy sectors.5 This article focuses on the latter strand of case law. To do so, it starts by setting out the objectives underlying the exploitation of renewable energy sources and the factors that make State intervention necessary in this sector. Then, after taking a bird’s-eye view of the objectives pursued by WTO subsidy law, it looks into the WTO disputes concerning this issue, namely the Canada-Renewable Energy case and the India-Solar Cells case.6 Bearing this in mind, it examines the approaches emerged in the legal scholarship to solve this tension. Finally, it seeks to contribute to this debate by putting forward an alternative solution to reconcile renewable energy subsidie
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