Issue No.5

Contents:
1. NEWS
A. RETALIATION AT THE WTO/WEO VERSUS COOPERATION AT UNEP/ILO
B. EU RESEARCHERS ADVOCATE FULL FLEXMECHS
C. UKRAINIAN HOT AIR
2. THE CLIMATE CHALLENGE TO INFORMATION AND COMMUNICATION TECHNOLOGY


1. NEWS
We at the ASIS project have developed ideas for COP5 in Bonn, which begin with the thesis that computer networks, along with lower transport costs, are helping make possible the current "globalization" of the economy. This issue of the newsletter therefore brings you coverage of developments at the citadel of globalization, the World Trade Organization WTO. That first thesis along with 12 more are outlined at http://ourworld.compuserve.com/homepages/thomasruddy/theses.htm. There will be a face-to-face meeting of persons interested in discussing these theses during the conference from 27-28th July 1999 in Stuttgart described in greater detail below. Please express your interest to the editor.

Quote of the week: "The WTO remains a lightning rod for environmental complaints, ...because of the Organization's capacity to impose sanctions that hit countries in their pocketbooks", [UN] Development Update (cited below).

A. RETALIATION AT THE WTO/WEO VERSUS COOPERATION AT UNEP/ILO
At a pivotal high-level symposium on trade and the environment sponsored by the WTO and held in March in Geneva" (see ONLINE NEWSLETTER, No.2), WTO Director-General Renato Ruggiero spoke in the presence of UNEP Executive Director Klaus Toepfer of the possibility of setting up a "World Environment Organization to complement the WTO". The WTO and UNEP have announced that they will provide details on this development in a memo of understanding before the Seattle ministerial meeting of the WTO in November (see ONLINE NEWSLETTER, No.3). The United Nations' publication _Development Update_ #27 foresees that "the United States, Japan and the European Union in particular are pushing for a new 'Millennium Round' of trade talks, as follow-up to the Uruguay Round that was concluded in 1994."
"The most sensitive issues that stand in the way of a new round of [trade] liberalization involve environmental and labour standards and investment" ( http://www.un.org/cgi-bin/dev.pl). NGOs in the North fear that standards are going down, and their pleas often result in attempts to get trade sanctions put into place, as evidenced in the quote above. Meanwhile the South fears that for protectionist reasons standards are going up, and "the Group of 77 developing countries and China [have] listed opposition to the linkage of trade issues with environmental and social standards at the top of their development-related objectives in an April 1999 communique," reports _Development Update_ #28 in its current issue

(http://www.un.org/News/devupdate/latest.htm#unctad).

_Development Update_ then goes on to describe how UN Secretary-General Kofi Annan described at the World Economic Forum in Davos how to avoid sanctions through his "cooperative-rather-than-retaliatory" proposal of "how to avoid harmful [trade] liberalization fallout... This agenda [was] under discussion at an UNCTAD-initiated meeting of trade and environmental policy-makers from 20 developing countries in Geneva in June, kicking off an 18-month project."

At the same time, the United Nations' plans to intensify cooperation with the private sector have been under harsh criticism for months now because of UNDP's proposed Global Sustainable Development Facility, including information and communication technology from AT&T, Oracle, Ericsson and Telia, http://www.corpwatch.org/trac/undp/index.html. Outgoing UNDP administrator James Gustave Speth gave his rebuttal, http://www.undp.org/news/pressrel/p990318e.htm

As for the above-mentioned "sensitive issue investment", Reuters on July 8th reported that the European Union is "calling for negotiations in the WTO on a multilateral framework of rules on international investment. Attempts to negotiate an investment treaty [MAI] in the Organisation for Economic Cooperation and Development have broken down, and the United States has dismissed the idea of trying to reach an ambitious investment treaty in the WTO" ( http://customnews.cnn.com/cnews/pna.show_story?p_art_id=3976303&p_section_name=World&p_art_type=646205&p_subcat=EUROPEAN+UNION&p_category=Europe). The EU's idea is now likely to be less "ambitious" than the MAI was.
Criticism is laid out by a left-leaning think tank in the Netherlands called CEO, http://www.xs4all.nl/~ceo/observer4/index.html

B. EU RESEARCHERS ADVOCATE FULL FLEXMECHS
After a year of interdisciplinary assessments, the experts at the European Union's Joint Research Centre working on the "Futures 2010" project in Seville have just released the final project reports. One of the project's panels, that on Natural Resources and the Environment, has discovered in its Futures Report No.5 that the "seeds" of Mr. Ruggiero's ideas (to set up a WEO; see Story A above) are "already encapsulated in the Kyoto Protocol. The panel says that the protocol "proposes a number of entirely novel policy instruments to reduce the cost burden of reducing greenhouse gas emissions: [IET, JI and the CDM]." These mechanisms will eventually require monitoring and verification, for which "one option that will shortly have to be considered is a global environmental agency."

The NR&E Panel is struck by the rapidity of climate change: "The planet has certainly experienced climate change in the past..., but never at the rate that seems likely to pertain in the case of man-made greenhouse effects." The panel's report goes on to explain in its 118 pages how "it is hard to see how clusters of energy technologies could by themselves make a major impact on the global CO2 problem unaccompanied by major policy initiatives". Neither a nuclear breakthrough nor clean coal would really matter, "given the slow pace of the electricity demand growth in the OECD-EU", so that the overall effect of the enhanced development of technologies would be quite modest" there. Instead, major and wide-reaching behavioural changes will be required, which can only be achieved through restrictive measures such as taxes. If Europe takes a lead role, though, in meeting its targets through more than 50% domestic emission reductions, its most heavily taxed sectors will suffer from the resulting loss of competitiveness (as it would not be allowed to resort to protection through border tax adjustments because of the trade regime), and not much would be achieved for the environment either. The reason is that no trading bloc can successfully combat climate change by itself. Instead, broad international action engaging the USA, China and India is imperative.
In conclusion, the panel judges that "the greatest challenge in the short run is get the USA to ratify [the Kyoto] targets. Given the existing trends in energy demand in America, its Kyoto commitment is [almost] double that of the EU's. Consequently the USA has taken the line that ... its targets... must be achieved with minimal costs, that is, largely through international cooperation and trade. If the EU continues to fight against that philosophy and goes it alone in meeting its commitment mainly through domestic measures, it will be looked upon as an act of great courage by some, and of immense economic folly by others" (published on
http://futures.jrc.es/PANELS/PANEL3/panel3.html; at the top of the left page there is a line that says Final Report with a box beside it that you need to click on to open the report in Adobe Acrobat Reader's pdf format).

The report also includes an assessment by Nick Sonntag, Executive Director of the Stockholm Environment Institute, of the likelihood of a flip in the Gulf Stream Current during the next 30 years and its consequences. Stefan Rahmstorf is also an expert on this topic, and will be speaking about it at the Stuttgart conference, about which we will report in the next issue

(http://www.pik-potsdam.de/~stefan/home_1.htm).

C. UKRAINIAN HOT AIR
At the June conference at RIIA in London, speakers from both the U.S. and Mexican governments praised a new approach to encouraging developing country participation proposed by the World Resources Institute and described at http://www.wri.org/wri/climate/develop.html. Russia and the Ukraine, as potential sellers, would at first appear to be more likely to oppose the WRI approach than Mexico. This issue of the newsletter, though, features an exclusive favourable comment on the WRI proposal by reader Vladimir Demkine, PhD, who was Secretary of the Ministerial Task Force on UN FCCC implementation in Ukraine in 1998 (demkin@ukrpack.net). Reader Kevin Baumert, co-author of the WRI paper (kbaumert@wri.org), wishes to emphasise, though, that "the 'carbon intensity' approach advocated in the WRI paper is for developing countries", not Annex I countries like Russia and the Ukraine. However, the experiences of economies-in-transition like the Ukraine constitute very useful cases to learn from when thinking about developing country participation and avoiding future 'hot air.'"

In Kyoto in 1997 the final decision was negotiated during the last night, and the result has to be regarded as a set of compromises. Everybody understood that this option could hardly be considered a reliable way of meeting commitments. But as 'hot-air' is a rather political issue, it will probably be solved with political instruments in the near future. In principle, I feel the Ukraine should not object to use of the indicator carbon intensity instead of annual carbon emissions, if certain conditions come about in our country, which I describe below.

The Ukraine's carbon intensity has worsened for at least two reasons: Firstly, GDP has really declined since the disintegration of the Former Soviet Union, but energy consumption has not fallen as rapidly. Secondly, a significant share of the Ukrainian economy works in the informal sector. As the World Bank estimates, some 50% of GDP is produced beyond official controls. Although it mainly relates to low energy consuming sectors, this factor must obviously distort the carbon intensity that is calculated on the basis of the official statistics.

However, by the beginning of the first budget period under the Protocol many economic imperfections will be eliminated (the share of high energy consuming sectors shall decrease because of market forces, energy saving technologies shall be partially introduced in the public sector and, after all, the share of the informal sector should decline). If such a scenario takes place, carbon intensity should improve. Thus there is no reason for the Ukraine to have fears of the approach proposed in the article.

2. THE CLIMATE CHALLENGE TO INFORMATION AND COMMUNICATION TECHNOLOGY (ICT)
The Climate Change Action Group is continuing its debate on how to harness the powers of computer networks and globalization to counteract the twin challenges of world poverty and climate degradation. See the theses outlined at http://ourworld.compuserve.com/homepages/thomasruddy/theses.htm