Developed countries' cap-and-trade border measures: China's possible reactions

Chinese Journal of International Law

Volumn 12, Issue 4, 2013, Pages 809-842

  Zhao, Jun ^a  

^a ZHEJIANG UNIVERSITY   (China)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84891545168     PISSN: 15401650     EISSN: 17469937     Source Type: Journal    
DOI: 10.1093/chinesejil/jmt029     Document Type: Article

References (203)

1. Chapeau" is used in the international agreement context to describe "an unnumbered introductory clause or paragraph covering several subsequent provisions.
2. Sanford Gaines, TheWTO's Reading of the GATTArticle XX Chapeau: A Disguised Restriction on Environmental Measures, 22UPenn JIEL (2001), 739, 741 fn.5. (Pubitemid 33648680)
3. The Appellate Body has described the chapeau as being an expression of the general international law principle of "good faith".
4. See United States-Import Prohibition of Certain Shrimp and Shrimp Products, WTO AB Report, WT/DS58/AB/R (12 October 1998) (hereinafter "USA-Shrimp (Oct. 1998))", para.158.
5. See e.g. Cass Sunstein, The World vs. the United States and China The Complex Climate Change Incentives of the Leading Greenhouse Gas Emitters, 55 UCLA LR (2008), 1675.
6. Different terms have been used in the existing literature and discourse to refer to these proposed "border measures", such as "border carbon adjustments" and "carbon border adjustments".
7. This article uses these terms interchangeably.
8. However, under theWTO framework, "border measures" and "internal measures" are different and subject to different rules.
9. For details, see Arie Reich, TheWTOas a Law-Harmonizing Institution, 25 U Penn JIEL (2004), 321, 326-327.
10. See e.g. Michael J. Grubb and Karsten Neuhoff, Allocation andCompetitiveness in the EU Emissions Trading Scheme: Policy Overview, 6 Climate Policy (2006), 137.
11. See e.g. Bradley J. Condon, Climate Change and Unresolved Issues in WTO Law, 12 JIEL (2009), 895, 898.
12. In a few cases, the contested measures failed the WTO law consistency requirements because they failed the chapeau requirement of Art.
13. XX so that the measures constituted "unjustifiable discrimination", "arbitrary discrimination" and/or "disguised restriction on international trade".
14. See e.g. United States-Standards for Reformulated and Conventional Gasoline, WTO AB Report, WT/DS2/AB/R (29 April 1996) (hereinafter "USA-Gasoline"); USA-Shrimp (Oct. 1998), above n.1;
15. Argentina-Bovine Hides, WTO Panel Report, WT/DS155/R (19 December 2000);
16. Brazil-Measures Affecting Imports of Retreaded Tyres, WTO AB Report, WT/DS332/AB/R (3 December 2007) (hereinafter "Brazil-Tyres").
17. For example, many people perceived that China wrecked the talks in the Copenhagen climate change conference, intentionally humiliated BarackObama, and insisted on an awful "deal".
18. See Mark Lynas, How do I know China wrecked the Copenhagen deal I was in the room, 22 December 2009 (www.guardian.co.uk/environment/2009/dec/22/ copenhagen-climate-change-mark-lynas (last visited 15 July 2013)).
19. See e.g. UnitedNations EnvironmentalProgram, Intergovernmental Panel on Climate Change, Second Assessment Synthesis of Scientific-Technical InformationRelevant to Interpreting Article 2 of theUNFrameworkConvention on Climate Change, December 1995 (www.ipcc.ch/pdf/climate-changes-1995/2nd- assessment-synthesis.pdf (last visited 15 July 2013)).
20. See Adam J. Moser, Pragmatism not Dogmatism: The Inconvenient Need for Border Adjustment Tariffs based on What is Known about Climate Change, Trade, and China, 12 Vermont JEL (2011), 675, 675.
21. See generally, Eric A. Posner and DavidWeisbach, Climate Change Justice (2012).
22. See e.g. Eleanor Stein, Regional Initiatives to Reduce Greenhouse Gas Emissions, in: Michael B. Gerrard, Global Climate Change and U.S. Law (2007), 315, 315.
23. Here are two examples: one is Senate bill 1766, introduced by Senators Bingaman (Democrat from New Mexico) and Specter (Republican from Pennsylvania); the other is Senate bill 2191, introduced by Senators Lieberman (Independent-Democrat from Connecticut) andWarner (Republican from Virginia).
24. If passed in their current form, these bills would require purchases of greenhouse gas emission allowances in order for imported goods to be allowed to enter the USA from countries that are not making satisfactory efforts to mitigate greenhouse gas emissions.
25. For details, see Thomas Brewer, U.S. Climate Change Policies and InternationalTrade Policies: Intersections and Implications for International Negotiations, Paper Prepared for a Seminar at the Georgetown University Center for Business and Public Policy (2007) (www. usclimatechange.com (last visited 15 July 2013)).
26. See generally, Low Patrick, Gabrielle Marceau and Julia Reinaud, The Interface between the Trade and Climate Change Regimes: Scoping the Issues, WTO Working Paper ERSD-2011-1 (12 January 2011) (http://www.wto.org/english/res-e/ reser-e/ersd201101-e.pdf (last visited 15 August 2013));
27. Robyn Eckersley, The Politics of Carbon Leakage and the Fairness of Border Measures, Ethics & International Affairs (2010), 367.
28. See generally, Julia Reinaud, Trade, Competitiveness and Carbon Leakage: Challenges and Opportunities, Energy, Environment and Development Programme Paper, January 2009 (http://www.chathamhouse.org/sites/default/files/public/ Meetings/Meeting%20Transcripts/0109reinaud.pdf (last visited 15 August 2013)).
29. See AdHocWorking Group onTrade and Climate Change, FromCollision to Vision: Climate Change and World Trade, A Discussion Paper, World Economic Forum, November 2010 (http://www3.weforum.org/docs/WEF-ClimateChange-World TradeDiscussionPaper-2010.pdf (last visited 15 August 2013)).
30. See e.g.World Carbon Dioxide Emissions Data byCountry:China Speeds Ahead of the Rest, Guardian Datablog, 31 January 2011 (www.guardian.co.uk/news/ datablog/2011/jan/31/world-carbon-dioxide-emissions-country-data-co2 (last visited 29 July 2012)).
31. Shi-Ling Hsu, The Case For A Carbon Tax: Getting Past our Hang-ups to Effective Climate Policy (2011).
32. See Robert N. Stavins, Addressing Climate Change with a Comprehensive U.S. Cap-and-Trade System, 24 Oxford Review of Economic Policy (2008), 298, 316.
33. See e.g. A. Denny Ellerman, Frank J.Converty and ChristianDePerthuis (eds), Pricing Carbon: The European Union Emissions Trading Scheme (2010);
34. DavidWeisbach, Carbon Taxation in the EU: Expanding the EU Carbon Price, Environmental LR (2012).
35. See e.g. Michael H.Davis and Dana Neacsu, Legitimacy, Globally: The Incoherence of Free Trade Practice, Global Economics and Their Governing Principles of Political Economy, 69 UMKC LR (2001), 733, 751, 755.
36. See e.g. Richard J. Pierce, Jr., Energy Independence and GlobalWarming, 37 Environmental L (2007), 595, 597.
37. In addition to problems with corruption, the carbon emissions cap-and-trade program has encountered several other problems.
38. See e.g. Steven Mufson, Europe's Problems Color U.S. Plans to Curb Carbon Gases, Wash. Post, 9 April 2007 (http://www.washingtonpost.com/wp-dyn/content/ article/2007/04/08/AR2007040800758.html (last visited 15 August 2013)).
39. See Rachel Brewster, Stepping Stone or Stumbling Block: Incrementalism andNational Climate Change Legislation, 28 Yale LPR (2010), 245, 285.
40. For arguments supporting cap-and-trade system, see Paul Krugman, Op-Ed.: The Perfect, the Good, the Planet, NY Times, 18 May 2009, at A23;
41. Richard B. Stewart and Jonathan B.Wiener, Reconstructing Climate Policy: Beyond Kyoto (2003).
42. See Steven Mufson, above n.22.
43. As a result, China beats the U.S. in establishing the cap-and-trade system.
44. See Susan Kraemer, China Even Beats U.S. to Cap and Trade, Due to Republican Opposition to Climate Legislation, 23 July 2010 (cleantechnica.com/ 2010/07/23/china-evenbeats-us-to-cap-and-trade-due-to-republican-opposition-to- climate-legislation/(last visited 15 July 2013)).
45. See e.g. StevenNathaniel Zane, Leveling the Playing Field: the International Legalityof Carbon Tariffs in the EU, 34 B.C. ICLR (2011), 199.
46. In the context of the climate change and trade debate, many have interchangeably used border adjustment measures or border tax adjustments and in some circumstances border rebate adjustments.
47. Each of those expressions refers to specific and distinct legal situations explained in the text thereafter).
48. Sophie Borenstein, Discussions for Framework for Carbon Tax Underway, 55 Tax Notes IL (2009), 276, 277.
49. The packagewas proposed by the EuropeanCommission on 23 January 2008.
50. See EU, Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/ECso as to improve and extend the greenhouse gas emission allowance trading system of the Community, Commission of the European Communities (2008).
51. A revised version of the package was adopted as the final Directive on 23 April 2009.
52. See Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (2009).
53. See, e.g, Biswajit Dhar and Kasturi Das, The European Union's Proposed Carbon Equalization System: Can it be WTO Compatible, Discussion Paper 156 (www. eaber.org/node/22989 (last visited 15 July 2013)).
54. See e.g. Emissions Trading Scheme-Aviation (http://www.epa.ie/climate/ emissionstrading/emissionstradingscheme-aviation/(last visited 15 August 2013)).
55. See also Joanne Scott and Lavanya Rajamani, EU Climate Change Unilateralism, 23 EJIL (2012), 469.
56. The EU is not giving adequate weight to the principle of Common but Differentiated Responsibilities and Respective Capabilities, and EU's Aviation Directive should be interpreted, applied, and where necessary adjusted in the light of it.
57. SeeCommonwealth of Australia, Securing a Clean Energy Future: the Australian Government's Climate Change Plan (2011), (www.cleanenergyfuture.gov. au/wpcontent/uploads/2011/07/Consolidated-Final.pdf (last visited 29 June 2013)).
58. See e.g. Onno Kuik and Marjan Hofkes, Border Adjustment for European Emissions Trading: Competitiveness and Carbon Leakage, Energy Policy (2010), 1741-1748.
59. See Gary Clyde Hufbauer, Steve Charnovitz and Jisun Kim, GlobalWarming and The World Trading System (2009), 39-89.
60. See e.g. Ben Lockwood and John Whalley, Carbon-motivated Border Tax Adjustments: OldWine in Green Bottles, 33(6) TheWorld Economy (2010), 810;
61. Alexandra Khrebtukova, Using National Border Climate Adjustment Schemes to Facilitate Global Greenhouse Gas Management in Industrial Production, 1 Washington.
62. Lee J.E., Climate and Environment (2010), 95.
63. See Ad HocWorking Group on Trade and Climate Change, above n.16.
64. See General Agreement onTariffs andTrade art. XX, 30 October 1947, 61 Stat. A3, 55 UNTS 194.
65. See e.g. Alan O. Sykes, The Least RestrictiveMeans, 70 Chicago LR (2003), 403, 405.
66. See Steven Nathaniel Zane, above n.26.
67. USA-Shrimp (Oct. 1998), above n.1, para.158.
68. Bin Gu, Mineral Export Restraints and Sustainable Development-Are Rare Earths Testing The WTO's Loopholes, 14 JIEL (2011), 765, 793.
69. Zhao, Cap-and-Trade Border Measures 817 44 USA-Gasoline, above n.6.
70. USA-Shrimp (Oct. 1998), above n.1;
71. United States-Import Prohibition ofCertain Shrimp and Shrimp Products, WTO AB Report, WT/DS58/AB/RW (22 October 2001) (hereinafter "USA-Shrimp (Oct. 2001)").
72. USA-Shrimp (Oct. 1998), above n.1, paras.172-173.
73. In USA-Shrimp (Oct. 2001), the Appellate Body agreed with the Panel that conditioning market access on the adoption of a program comparable in effectiveness, allows for sufficient flexibility in the application of the measure, so as to avoid arbitrary or unjustifiable discrimination.
74. See USA-Shrimp (Oct. 2001), above n.45, para.144.
75. USA-Shrimp (Oct. 1998), above n.1, paras.177, 181.
76. The appellate body rejected the government measure at issue in USA-Shrimp in part because of "the failure of the United States to engage the appellees
77. as well as other Members exporting shrimp to the United States, in serious, across-the-board negotiations with the objective of concluding bilateral or multilateral agreements for the protection and conservation of sea turtles, before enforcing the import prohibition against the shrimp exports of those other Members.
78. USA-Shrimp (Oct. 1998), above n.1, para.166. Moreover, the appellate body found a violation of the chapeau requirement because "the United States negotiated seriously with some
79. but not with other Members" that were similarly situated. In other words, the USA had concluded an international agreement with the Caribbean countries to address the issue of use of TEDs by shrimp trawlers but not with other countries
80. and such selective action visà-vis other WTO members was found to run counter to the principles of the chapeau to Article XX that require non-arbitrary and non-discriminatory action. USA-Shrimp (Oct. 1998), above n.1, para.172.
81. USA-Shrimp (Oct. 1998), above n.1, paras.166, 170-172.
82. See USA-Shrimp (Oct. 2001) above n.45, paras.122, 139, 143.
83. Fabio Morosini, Trade and Climate Change: Unveiling the Principle of Common but Differentiated Responsibilities from the WTO Agreements, 42 George Washington ILR (2010), 713.
84. Roland Ismer and Karsten Neuhoff, Border Tax Adjustment: A Feasible Way to Support Stringent Emission Trading, 24 European Journal of Law and Economics (2007), 137, 141.
85. Cf. Gavin Goh, The World Trade Organization, Kyoto and Energy Tax Adjustments at the Border, 38 Journal ofWorld Trade (2004), 395, 417-418
86. Participation in multilateral negotiations does not by itself provide an importing Member carte blanche to impose trade restrictive measures such as energy tax adjustments", asserting that importers have an obligation under ArticleXXto pursue negotiations.
87. Richard Harris, "Major Emitters" Meet toTackle Climate Change, (NPR radio broadcast 27 April 2009) (http://www.npr.org/templates/story/story. phpstoryId=10346 5542 (last visited 15 July 2013)).
88. Ryan Vanden Brink, Competitiveness Border Adjustments in U.S. Climate Change Proposals Violate GATT: Suggestions to Utilize GATT's Environmental Exceptions, 21 Colorado JIELP (2010), 85.
89. H.R. 2454 § 766 (a)(1).
90. In other words, the EU must demonstrate good faith efforts to bring those countries into the fold of an international effort to combat climate change before making a move to the second or third best option of unilateral border adjustments
91. and such negotiations must also occur on a non-discriminatory basis with all countries affected.
92. See Fabio Morosini, above n.52, 743.
93. See Nita Ghei, Evaluating the WTO's Two Step Test for Environmental Measures Under Article XX, 18 Colorado JIELP (2007), 117, 150.
94. USA-Shrimp (Oct. 1998), above n.1, para.177.
95. See USA-Shrimp (Oct. 2001), above n.45 (finding that the prohibition on certain shrimp imports violated U.S. Article III obligations but was a permissible restriction on trade under GATT Article XX(g)'s exception for measures protecting exhaustible natural resources).
96. USA-Shrimp (Oct. 1998), above n.1, paras.177, 181.
97. See e.g. Patrick Low and Gabrielle Marceau, above n.14.
98. There are various ways to assess the energy effectiveness of a policy.
99. United States-Import Prohibition of Certain Shrimp and Shrimp Products (Recourse to Article 21.5 by Malaysia), WTO Panel Report, WT/DS58/RW (15 June 2001) (hereinafter "USA-Shrimp (June 2001)"), para. 2.24.
100. Annex (Revised Guidelines pursuant to Section 609, 8 July 1999).
101. See Annex, above n.67 (Revised Guidelines, Section II.B).
102. USA-Shrimp (June 2001), above n.67, para.2.30.
103. Revised Guidelines for the Implementation of Section 609 of Public Law 101-162 Relating to the Protection of Sea Turtles in Shrimp Trawl Fishing Operations, 64 (130) Federal Register, Thursday, 8 July 1999, Notices.
104. For example, in Brazil-Retreaded Tyres, the Appellate Body took into consideration Brazil's developing country status to conclude that the measures the EU indicated to replace the import ban were neither viable nor feasible.
105. See Brazil-Tyres, above n.6, para.171.
106. See discussions in IV of this article (an argument for China under "common but differentiated responsibilities").
107. A processes and production method (PPM) refers to the way in which a product is made.
108. It covers any activity that is undertaken in production, such as activities related to the production of a goods item, to bringing the goods item to the market, and to the extraction of natural resources to be used in goods production.
109. See e.g. HUANG Zhixiong, A New Issue in International Trade: Border Carbon Adjustment Measures and Their Implications for China, 1 Zhongguo Ruankexue [China Soft Science] (2010), 1, 5.
110. China first became involved in international discussions on climate change in the 1980s when it collaborated with the United States to study the impacts of CO2 emissions.
111. See Paul G. Harris, China and Climate Change: from Copenhagen to Cancun, 40 EnvironmentalLawReporter-News&Analysis (2010), 10858 (http://www.epa. gov/ogc/china/harris.pdf (last visited 15 August 2013)).
112. Paul G. Harris, China's Responsibility for Climate Change: Ethics, Fairness, and Environmental Policy (The Policy Press 2011)
113. China has growing responsibility for climate change.
114. Richard Balme, China's Climate Change Policy: Governing at the Core of Globalization, 1 Carbon and Climate LR (2011), 44-56.
115. Based on my research, the relevant laws and regulations at various levels related to climate include approximately 23 laws (such as the Renewable Energy Law of the People's Republic of China), approximately 17 administrative regulations
116. Such as Regulations on Energy Conservation by Public Institutions), approximately 7 department rules (such as Measures for Operation and Management of CDM Projects in China), approximately 8 local rules.
117. such as Measures for the Administration of Carbon Emissions Trading of Beijing), and approximately 10 policies (such as China's National Plan for Addressing Climate Change.
118. See e.g. Dongsheng Zang, From Environment to Energy: China's Reconceptualization of Climate Change, 27Wisconsin ILJ (2009), 543.
119. Firstly, on 27 August 2009, the Standing Committee of the National People's Congress adopted a resolution, reconfirmed the urgency of climate change as an environmental and development problem, and the relationship between climate change and sustainable development.
120. Secondly, as mentioned in the Outline of the 11th Five Year Plan for National Economic and Social Development of the People's Republic of China
121. one important task of Chinese Government is to enforce national policies of resource-conserving and environment protection and establish a "resource-conserving and environment-friendly society with features of low input and high output, low consumption and emission, and cyclic and sustainable economic system".
122. Thirdly, in response to the requirement of theUNFCCC,in June 2007, theGovernment of China formulated China'sNational Climate Change Programme, outlining objectives, basic principles, key areas of actions, as well as policies and measures to address climate change for the period up to 2010.
123. Moreover, Chinese lawheavily relies on energy structure adjustment and industry structure adjustment to controlGHGemissions, such as to shift the energy structure and to reduce energy consumption.
124. For a detailed historical approach through a review of relevant literature, official statements, and policies examining the evolution of the principles that form the core of China's climate change negotiating position
125. see Gloria Jean Gong, Special Section on China and Climate Change, 23 Global Change, Peace & Security (2011), 159.
126. See Cass Sunstein, above n.2.
127. Annex I countries are those countries that are subject to legally binding emissions reductions under the Kyoto Protocol to the UNFCCC.
128. China Announces Targets on Carbon Emission cuts, Chinaview, 26 November 2009 (news.xinhuanet.com/english/2009-11/26/content-12544181.htm (last visited 15 July 2013)).
129. See e.g. Barbara Finamore, China Renews Efforts on Climate Change and Clean Energy in its Twelfth Five Year Plan, 28 October 2010 (http://switchboard. nrdc. org/blogs/bfinamore/china-renews-efforts-on-climat.html (last visited 15 August 2013)).
130. The emission trading scheme might help wean China's power generation and heavy industry off its dependencyon state support, and itwill allowChinese government to better collect accurate data on emissions, to name a few effects.
131. For details, see George Yu and Rob Elsworth, Turning the Tanker: China's Changing Economic Imperatives and Its Tentative Look to Emissions Trading, Sandbag Climate Campaign (April 2012), p. 15 (http://www.sandbag.org.uk/site- media/pdfs/reports/Sandbag-Turning-the-Tanker-Final.pdf (last visited 15 August 2013)).
132. NDRC, Wenshi Qiti Ziyuan Jianpai Jiaoyi Guanli Zanxing Banfa [Measures on the Administration of Voluntary Greenhouse Gas Emission Reduction Transactions in China (Interim)], issued by the NDRC on 13 June 2012 (http://qhs.ndrc.gov.cn/ zcfg/t20120621-487133.htm (last visited 15 July 2013)).
133. NDRC,Guojia Fazhan Gaigewei Guanyu KaizhanDitan Shengqu he Ditan Chengshi Shidian Gongzuo de Tongzhi [The Notice to Pilot Provincial and City Low-Carbon Programmes], issued by theNDRCon 19 July 2010 (http://www.sdpc.gov.cn/zcfb/ zcfbtz/2010tz/t20100810-365264.htm (last visited 15 July 2013)).
134. For example, from 1989 to 1998, climate change was largely understood as an environmental issue, managed bureaucratically by a high-level inter-ministry group, the State Council's Environmental Protection Committee
135. where the environmental agency, SEPA, and the scientific community, represented by the China Meteorological Administration, State Science and Technology Commission, played influential roles but were largely powerless to effect real change or regulatory reform.
136. From 1998 (bureaucratically), or 2003 (intellectually), to the present, climate change has been redefined as an energy policy issue, managed by the powerful National Development and Reform Commission, which is also in charge of the nation's energy policy and is a much more potent force.
137. See Dongsheng Zang, above n.84.
138. Dongsheng Zang, Green fromAbove: Climate Change, NewDevelopmental Strategy, and Regulatory Choice in China, 45 Texas ILJ (2009), 201, 217
139. Incentive-based instruments might not work in China due to the lack of functional market mechanism.
140. If it is up to the government to decide the price, it will easily become a politically sensitive issue.
141. See e.g. LANG Xianping, Eryang Huatan Daozhi Qihou Biannuan shi Jingtian Da Yinmou [It is an Earth-shattering Conspiracy that CO2 will Cause Climate to Become Warmer], (finance.eastmoney.com/news/1370,20111228184882950. html (last visited 3 August 2012)).
142. In the end, both China and theWest would end up just using climate change as a bargaining tool in larger geopolitical or trade disputes, and what would suffer is the climate.
143. So that is why we need a global regulatory structure: otherwise, politicians will use climate change as just another political tool, at the expense of the planet.
144. China Moves Forward with Cap-and-Trade Scheme, 11 November 2011 (globe-net. com/articles/2011/november/6/china-moves-forward-with-cap-and-trade- scheme/(last visited 15 July 2013)).
145. Alexander Ochs and HaibingMa, China's Cap-and-trade Push, Climate Spectator, 14 September 2010 (www.businessspectator.com.au/article/2010/9/14/ policy-politics/chinas-cap-and-trade-push (last visited 15 July 2013)).
146. Andrew Restuccia, China to Institute Cap-and-Trade System, TheWashington Independent, 23 July 2010 (washingtonindependent.com/92349/china-to-institute- capand-trade-system (last visited 15 July 2013)).
147. See generally, Cao Haili, Is China Ready for Cap-and-Trade, Inside Climate News, 4 January 2010 (insideclimatenews.org/news/20100104/china-ready- cap-and-trade (last visited 1 July 2012));
148. ZHENG Lingli, Ditan Jingjixia Tanjiaoyi Falv Tixi de Goujian, 1Huadong Zhengfa Daxue Xuebao [Journal of East China University of Political Science and Law] (2011), 59.
149. But Cf.CHENJianpeng, Zhongguo Bingbu Poqie Xuyao Tanshichang [China Does Not Need Carbon Market Urgently], 20 July 2011 (http://jjckb.xinhuanet.com/ opinion/2011-04/25/content-304059.htm (last visited 23 August 2013)).
150. Beijingshi Fazhan he Gaige Weiyuanhui, Beijingshi "Shierwu" Shiqi Nengyuan Fazhan Jianshe Guihua [Beijing Municipal Commission of Development and Reform, Beijing's 12th Five-Year Guideline for Energy Development], (http://www.bjpc.gov.cn/zt/125ny/(last visited 15 July 2013)).
151. HUANG Hongping, Beijing Tanpaifangquan Jiaoyi Qidong Jiangyinru Disanfang Hezheng [The Carbon Emission Trading Launched in Beijing and It Would Adopt Third PartyValidation], 9 April 2012 ( paper.chinahightech.com.cn/html/2012-04/ 09/content-28056.htm (last visited 26 May 2013)).
152. LI Meiying, Beijing Qidong Tanpaifangquan Jiaoyi Shidian, Ni Qiangzhi Naru 600 Danwei [Beijing Launches the CarbonEmissionTrading and It Plans to IncludeCompulsively 600 Units], 3 April 2012 (finance.sina.com.cn/roll/20120403/ 025611740880.shtml (last visited 26 May 2013)).
153. FU Xianjie, Tianjin Paifangquan Jiaoyisuo Chengdan Yazhou Kaifa Yinhang Tigong 75WanMeiyuan [Tianjin Climate Exchange Received $750,000 from the Asian Development Bank], 28 February 2012 (www.tianjinwe.com/binhai/jrbh/201202/ t20120228-5243692.html (last visited 17 April 2012)).
154. T. R. Z. Bangongting, Guanyu Yinfa Tianjinshi Ditan Chengshi Shidian Gongzuo Shishi Fang'an De Tongzhi [The General Office of Tianjin Municipal People's Government, The Notice of Printing and Distributing "Pilot Low-Carbon Zone" Implementation Program in Tianjin], 19 March 2012 (www. tjzb.gov.cn/system/2012/05/10/000272103.shtml (last visited 17 April 2012)).
155. LI Rong, ZhongguoNengyuanGai Ruhe "Suanzheyong" [How Should ChinaUse Its Energy Economically], 12 March 2012 (politics.banyuetan.org/gsxs/ ssgc/120312/64640.shtml (last visited 17 April 2012)).
156. Shanghai Environment Energy Exchange, Shanghai Environment Energy Ltd established, 23 December 2011 (http://www1.cneeex.com/jiepaiyishi/ xiangguanbaodao/20111223xwtg.html (last visited 23 August 2013)).
157. WANG Songtao, Chongqing Huozhun Kaizhan Tanpaifang Jiaoyi Shidian [ChongqingWas Approved to Undertake Pilot Carbon EmissionTrading Scheme], 2February 2012 (www.nxnews.net/cj/system/2012/02/02/010257904.shtml (last visited 17 April 2012));
158. ChongqingshiTanpaifangquan Jiaoyi Pingtai, 2015 NianQuanshiTanpaifang Jiang17%[Chongqin'sMunicipal Platform of Carbon EmissionTrading, and the Carbon Emission of the MunicipalityWillReduce by17%by theYear of 2015], 18 February 2013 (www.tanpaifang.com/tanjiaoyi/2013/0217/15198.html (last visited 15 July 2013)).
159. The Economic and Information Commission of Guangdong Province, Guangdongsheng "Shierwu" Jieneng Guihua [Guangdong's 12th Five-Year Guideline for Energy Conservation], passed on 17 June 2011 (www.gdei.gov.cn/ flxx/jnjh/zcfg/201107/P020110721398855166025.doc (last visited 17 April 2012)).
160. SUDaoxiang, Guangdong:Weilai 5-10 Nian Shixian ShengjiTanpaifangquan Jiaoyi [Guangdong Plans to Upgrade Its Carbon EmissionTrading Scheme in theNext 5-10 Years], 2 April 2011 (news.ifeng.com/mainland/detail-2011-04/02/5526171-0. shtml (last visited 17 April 2012)).
161. QU Lingyun, Wuhan Shuaixian Tansuo Tanpaifang Jiaoyi Jin 4 Nian [Wuhan Has Been Acting as a Pioneer in Exploring Carbon Emission Trading for Almost 4 Years], 15 January 2012 (cjmp.cnhan.com/cjrb/html/2012-01/15/content-4950669.htm (last visited 17 April 2012)).
162. Hubeisheng Tanpaifangquan Jiaoyi Guanli Banfa Jiang Zhengshi Shishi [Hubei Province's Regulation of Carbon Emission TradingWill be Implemented Formally], 28 January 2013 (www.0txf.com/index.phpp=254&a=view&r=235 (last visited 15 July 2013)).
163. A number of actions have been proposed: they could "green" the GATT by rewriting long-standing WTO rules to take climate change more fully into account.
164. Or WTO members could approve a "waiver" to WTO obligations for certain specified actions to deal with the threat of climate change;
165. or a "coalition of the willing" forming a subset of WTO members could commit to a set of rules on climate change that would be binding solely on them and would be enforceable in WTO dispute settlement.
166. See Ad HocWorking Group on Trade and Climate Change, above n.16.
167. See Rachel Brewster, above n.23.
168. However, it is also possible that Chinese government may decide not to react by retaliation.
169. Chinese enterprises, especially, will conduct their own cost-benefit analyses and will invest in upgrading technology or helping US importers to buy the allowance, should the Chinese companies deem it as cost-effective.
170. Moreover, should the USA adopt the cap-and-trade mechanism as a disguised trade protectionism, Chinese enterprises might be able to find alternativemarkets in order to get around the trade barrier.
171. Larry Parker and Jeanne J. Grimmett, Climate Change: EU and Proposed U.S. Approaches to Carbon Leakage and WTO Implications, CRS Report for Congress (2010), 35.
172. See e.g.HU Guoquan,LUOYong and LIU Hongbin,Contributions of Accumulative Per Capita Emissions to Global Climate Change, 5 Qihou Bianhua Yanjiu Jinzhan [The Development of Research on Climate Change] (2009) 30, 30-33.
173. However, there is news that China's per capita emissions may overtake those in the USA by 2017.
174. See Mat McDermott, China's Per Capita Emissions May Overtake Those in U.S. by 2017-Now Same As Italy's, TreeHugger, 28 September 2011 (www. treehugger.com/climate-change/chinas-per-capita-emissions-may-overtake-thosein- us-by-2017-now-same-as-italys.html (last visited 15 August 2013)).
175. See generally Eric Neumayer, In Defense of Historical Accountability for Greenhouse Gas Emissions, 33 Ecological Economics (2000), 185.
176. See Eric A. Posner and Cass R. Sunstein, Should Greenhouse Gas Permits Be Allocated on A Per Capita Basis, 97 California LR (2009), 51.
177. See Bruce Yandle, Grasping for the Heavens: 3D Property Rights and the Global Commons, 10 Duke Environmental Law & Policy Forum (1999), 13, 30.
178. See ZHANG Zhongxiang,Breaking theImpasse in International ClimateNegotiations: A New Direction for Currently Flawed Negotiations and a Roadmap for China to 2050, 2011. (http://www.feem.it/userfiles/attach/ 2011623936504NDL2011-049. pdf (last visited 15 July 2013)).
179. See Fabio Morosini, above n.52 (due consideration given to the principle of common but differentiated responsibilities in future trade and climate change disputes will be an effective way of empowering and engaging developing countries in the fight against global warming).
180. The common but differentiated responsibility principle evolved to acknowledge the difference in resources and capabilities of developed and developing states.
181. Application of the principle typically results in higher standards of conduct for developed states.
182. See e.g. Patricia Birnie
183. Alan Boyle and Catherine Redgwell, International Law and the Environment (2009), 132-133.
184. See Andreas Oberheitmann and Eva Sternfeld, Climate Change in China-The Development of China's Climate Policy and Its Integration into aNewInternational Post-Kyoto Climate Regime, 38(3) Journal of Current Chinese Affairs(2009), 135, 142.
185. See generally, Joost Pauwelyn, U.S. Federal Climate Policy and Competitiveness Concerns: The Limits and Options of International Trade Law, prepared by the Nicholas Institute for Environmental Policy Solutions, Duke University (http://www. climateactionproject.com/docs/internationaltradelaw.pdf (last visited 15August 2013)).
186. See Low Patrick et al., above n.14, 20.
187. See Kaplow and Steven Shavell, Why the Legal System Is Less Efficient Than the Income Tax in Redistributing Income, 23 JLS (1994), 667;
188. Louis Kaplow and Steven Shavell, Should Legal Rules Favor the Poor Clarifying the Role of Legal Rules and the Income Tax in Redistributing Income, 29 JLS (2000), 821.
189. See Larry Parker and Jeanne J. Grimmett, above n.117.
190. Michael P. Vandenbergh and Mark A. Cohen, Climate Change Governance: Boundaries and Leakage, 18 New York University Environmental LJ (2010), 221.
191. However, several scholars have expressed their concerns overWTODSU's institutional competency in resolving this issue on climate change.
192. See e.g.Gregory C. Shaffer, SymbolicPolitics andNormative Spins:The LinkbetweenU.S.DomesticPolitics andTrade-Environment Protests, Negotiations, and Disputes, 31(1) Environmental Law Reporter (2001), 11174.
193. See also,WTOSecretariat, Trade and Environment at theWTO, April 2004 (www.wto.org/english/tratop-e/envir-e/envir-wto2004-e.pdf (last visited 1 July 2012)).
194. As a result, the US and EU governments might be able to object to WTODSU's jurisdictionover climate change onthe groundof lackof institutional competency.
195. Thomas P. Lyon, A U.S.-China Partnership to Protect Our Climate, 107 Michigan LR-First Impressions (2008), 70.
196. Obama Voto Jointly Tackle Climate Change and Reduce Hydrofluorocarbons, Xinhua, 9 June 2013 (www.globaltimes.cn/content/787974.shtml (last visited 25 June 2013)).
197. See LI Keqiang Huijian Meiguo Guowuqin Keli, 14 April 2013 ( politics.people.com. cn/n/2013/0414/c1024-21126059.html) (last visited 11 May 2013).
198. See Anu Bradford and Omri Ben-Shahar, Efficient Enforcement in International Law, 12 Chicago JIL (2012), 375.
199. The mechanism of Reversible Rewards combines sticks and carrots in a unique, previously unexplored way.
200. Reversible Rewards require that a sum of money be offered as a reward to theTarget for its compliance (Incentive 1).
201. Alternatively, the same amount of money can be used to pay for sanctions in case the Target turns down the reward (Incentive 2).
202. This way, the money earmarked for the enforcement effort "works twice" and thus doubles the Target's incentives to comply.
203. Moreover, Reversible Rewards can be pre-committed in an enforcement fund to solve the problem of credibility.