Despite diverse efforts in the past two decades, countries have not been able to create an international climate change regime that effectively addresses the challenges at stake. Meanwhile, the Arctic Ocean keeps melting, an area the size of Costa Rica is lost to deforestation every year, and low-lying islands could disappear by 2050 due to a rise in sea level. There are several other huge challenges posed by climate change, which urgently call for serious international action.
While a multilateral environmental agreement would be so much desired, year-by-year the realization that a broad agreement on this matter is not likely to be achieved becomes more apparent. Countries should not let the best be the enemy of the good and should be ready to take recourse to a practical plan B. For a challenge of this size, this paper argues soviety should build on previous experiences, such as the evolution of the multilateral trading system. This regime is perhaps the world’s greatest achievement in terms of human organization and has proven to be successful in many ways. Yet, it was not built through a single understanding, but over time by small and constant agreements among a limited number of countries, who round-by-round created a legitimate international institution. Due to the strong linkage between trade and environmental measures, the multilateral trading system and the World Trade Organization (WTO) could and should become a relevant tool to advance climate change.
A general and permanent exception to the most-favored nation (MFN) principle under the WTO that permits trade benefits under climate clubs might be a policy option worth exploring. This exception could constitute an incentives-based system that serves as a first step for countries to address climate change. Moreover, it could represent a practical approach, since it is unlikely that the several initiatives proposed are going to be explored or negotiated at once.