International Trade

As countries fulfill their commitments to the Paris Climate Agreement and engage in climate change mitigation policies and domestic decarbonization strategies, governments must ensure their policies comply with their trade obligations. The chapter provides a brief overview of key areas where international trade rules may impact U.S. policies geared toward decarbonization. It focuses primarily on the policies needed for decarbonization, as outlined in the DDPP reports, that are connected to international trade rules, with the goal of finding ways of using the international trade legal framework as another tool for encouraging, rather than inhibiting, decarbonization efforts at the national level. Part II sets out the policy tools promoting decarbonization most likely to implicate or conflict with trade rules. Part III provides a primer on the main trade rules that intersect with decarbonization tools, such as border tax adjustments, subsidies, labeling schemes, and local content requirements (LCRs). Part IV examines specific cases where decarbonization has led to trade law conflicts as well as recommendations for decarbonization strategies that are trade compliant and avoid such conflicts in the future. Part V considers preferential trade agreements as an alternative way that trade policymakers and regulators may work together toward decarbonization.