Globalization and Scarcity - Center on International Cooperation ...

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Globalization and Scarcity - Center on International Cooperation ...

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Similarly, while the WTO has powerful enforcement

capacities, the rules that it polices are largely silent about

the kind of trade risks that arise from scarcity. The WTO

was essentially created as a way of resolving arguments

between countries about market access – the sorts of

dispute that arise in a buyer’s market, of the kind that

prevailed in agriculture until the beginning of the 21st

century. Faced with the disputes of a seller’s market,

however – concerned not with market access, but with

security of supply – the WTO was left largely on the

sidelines, impotent to intervene as the world trade system

was convulsed by export restrictions ong>andong> frantic bidding

wars.

The risk of unilateral carbon tariffs shows a similar

underlying dynamic. In the end, the reason some

countries may opt for unilateral use of such tariffs is the

absence of a multilateral framework for managing climate

change. If it existed, there would be no need for individual

countries to act on concerns that tackling climate change

without comparable action from others would render

them uncompetitive. Again, the risk of zero sum outcomes

arises because of a failure to agree on collective policy

frameworks that create sufficient trust to enable non-zero

sum outcomes.

What are the key tasks for multilateral cooperation

Policymakers can take a number of actions to increase the

trade system’s resilience to the effects of climate change

ong>andong> scarcity – by no means all of which are dependent on

resurrecting the current ailing Doha trade negotiations

(although this will ultimately be necessary in order to

make progress on some fronts).

It is important to be clear, though, that while collective

action on trade can make some progress, it does not

represent a complete solution to the risks of zero sum

competition implied by scarcity issues – a challenge

returned to in the section below on strategic resource

competition.

Key Multilateral Tasks for Managing ong>Scarcityong>: Building a

Resilient Trade System

Short term (e.g. actions that could be agreed at summit

meetings in 2011 or 2012)

• Bring emerging economies into full IEA membership

• Scaling up food stocks (either real or virtual, at

multilateral or regional level)

• Implement mechanisms to use intergovernmental peer

pressure to reduce the risk of export bans or restrictions

Medium term (actions requiring greater political heavy

lifting, likely to take 3-5 years)

• Move forward with liberalization of developed country

farm support regimes

• Agree terms of use for carbon tariffs to reduce the risk of

‘climate protectionism’

Key questions ong>andong> issues

• What will energy scarcity mean for international trade

• Will more countries come to regard increased selfsufficiency

as more resilient than reliance on open

markets

Short term tasks

As noted in the first part of the paper, the International

Energy Agency is already warning of the risk of a renewed

oil price spike in the short term. The dangers this would

pose – for the still-fragile global economic recovery, for

food prices, for poor countries ong>andong> fragile states – make

this a top priority for policymakers to tackle. The most

immediate way of doing so would be to expong>andong> the

International Energy Agency’s membership to include

emerging economies, who will account for virtually all

growth in oil demong>andong> in the next two decades.

As noted, the IEA is, at its core, a mechanism for cocoordinating

emergency oil reserves. Under the

Agreement on an International Energy Program – the IEA’s

enabling treaty, usually referred to as the ‘IEP Agreement’ –

IEA member governments must hold stocks equivalent to

90 days of net oil imports. In an emergency situation, they

must release oil from these stocks or take other action such

as restraining demong>andong>, switching to other fuels, increasing

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