Rethinking Climate Change Governance and Its Relationship to the World Trading System

International climate negotiations have thus far eschewed efforts to incorporate trade restrictions, but they have also failed to achieve their objective of reducing global emissions. Because of this failure, some countries are now inclined to act unilaterally and minilaterally, in many cases by imposing trade restrictions against third parties. Such actions are likely to invite retaliation. They could even ignite an escalating trade war. The best way to avoid such conflicts is not to limit the use of trade restrictions, but to make international climate negotiations effective. Ironically, success in addressing climate change multilaterally may require incorporating trade restrictions in a new kind of climate agreement. Trade restrictions have been used successfully in other international agreements. But in these agreements, the primary purpose of the restrictions has been to encourage participation. That is, their primary purpose has been to enforce the agreement. This is the role trade restrictions ought to play in a new climate treaty. But for them to play this role, the design of climate treaties must change. If climate treaties are designed strategically, the threat to restrict trade will suffice to enforce the agreement; and if the threat to restrict trade is credible, and the punishment associated with the restriction severe, trade restrictions will not actually have to be used. By incorporating trade restrictions in this way, greenhouse gas emissions can be reduced without putting at risk the gains from multilateral cooperation in trade.