ASTK18391U The Politics of International Trade: The Green Transition

How does the globalization of the economy affect the global environment? This question has long been at the center of the climate and sustainability debate. This course focuses on the role of trade, both the globalization of free trade, the recent slowbalisation of global trade and production, and the rise of geo-economic and protectionist tensions in the liberal trading order. There remains no consensus on whether free trade promotes green transitions, neither politically nor theoretically. For instance, green liberals remain convinced that greener globalization is possible, and indeed, happening at the moment, whereas critics neoliberally structured globalization as the root cause of the environmental degradation of the planet, and a barrier to a sustainable future 

The course is about the international political economy of green trade, its potential to redirect globalization in a different direxction, the trade related barriers to a global, robust sustainable form of globalization, and the problems generated by trade. Trade is understood in context of global-local production modes, finance flows and consumption patterbs. Globalization is seen as uneven and oended, promoted and contested, powerful but also fragile and reversible. The course not only examines whether we are witnessing a ‘new‘ era of deglobalisation in trade, understood as geo-economically driven, disorderly replacement of the postwar trading order by an uncertainty of power rivalries and economic nationalism, but also how these transformations impact the green transition. The course sees ‘trade politics’ as a complex form of foreign economic policy, driven by states preferences, and by extension, practices and dominant scripts of major international institutions, but no exclusively so. It is also heavily influenced by both pro-liberal or protectionist business and commercial interests, distinctive national socio-economy framings of trade, ranging from pro-liberal and anti-globalist and sentiments. Globalization is open-ended change, that is co-constituted by the governance of globalisation. This does not prelude a critical examination of power, however.

The Politics of International Trade (PIT) course sees the politics of trade as a powerful shaper of the green transition. Trade wars, disrupted supply chains, economic nationalism, corona-crisis and climate politics will impact the pace and course of the green transition. Trade

The first part of the course examines the intersection between trade and the green transition. Green Liberals (i.e. liberal internationalists in IR and regulatory liberals in IPE) understands the green transition as collective action problem, and a market failure problem. The problem is the price of pollution, imperfect information, distorted markets and price mechanisms. The solution is technical innovation, and sufficient finance to complete the transition. But cooperation is flawed by  competition, free riding and mistrust. The green transition need assurances, such as market transparency, enforcement and verification mechanisms, market corrections (taxes, quotas and tariffs) and economic incentives (green subsidies). One vital instrument is the promotion of green products and services. Trade governance is about designating what is legitimate trade restrictions, subsidy and trade finance practices. To this end, effective verification and enforcement regimes are needed. For instance, the green transition is also about eliminating environmental harmful subsidies, most importantly on fossil energy, agriculture and fisheries.

Yet, it has been extremely difficult to achieve. Progression is slow. Optimists point to recent breakthroughs, which indicate an unprecedented degree of greener global trade. Critics and pessimists see such initiatives are insufficient. Something is happening - but it getting too late. The green transition is urgent, and requires radical changes.

The course starts by identifying how to understand ‘the green transition’, in the literature and in the debate, and how trade can be linked, positively and negatively, to the green transition. Two dimensions are emphasized; emission reduction by energy reduction technologies (renewable energy) and promotion of the circular economy by re-thinking the flows in the economy altogether together (from design, production, consumption to waste and reuse). Trade affects both dimensions directly (import bans, tariffs, import quotas or 

zero-tariffs on either polluting or sustainable products) and indirectly (subsidies of either polluting or sustainable production, facilitating finance flows in either direction).  In substance, the course will look at classic and new ‘green trade conflicts’, such as GATT-WTO conflicts (dolphin and turtle protection regimes, GMO and precautionary principle, biofuel import requirement and tropical timber trade), the renewable energy (solar power trade war between US-China), affords to liberalise green products (EGA in WTO), the plastic waste crisis (China import ban, and its unintended consequences, new Basel regime), the problem of fossil fuel subsidies, and climate border adjustment tariffs (CBAMs in the Green Deal/EU), green finance facilitating green innovation, sustainable trade promotion though trade agreements, and voluntary initiatives to promote sustainable consumption.

The course will also introduces the basic rules of how international trade relating to the green transition is regulated, the main principles, mechanisms and issues involved as well as politics of regulating trade, emphasizing the international political economy (IPE) theories and research on green transformations in global trade. It will address the ongoing discussion of e.g. the new comprehensive trade agreements, ongoing WTO activities, G7-G20 and OCED initiatives, and unilateral trade policy practices supportive to the green transition. It will also introduce the basic setup of different trade policies and policy processes, the legal and institutional characteristics of relevant sites (such as the WTO) and actors (esp. EU).

Finally, the course will end by reconsidering the different IPE theories and approaches to the study of contemporary trade politics relating to the green transition. Some familiarity with basic IR and IPE theories is helpful. In brief, the course will relate the green transition to 1) conventional interests-orientated, liberal IPE approach (focusing on negotiations, regulation and enforcement in the trading system), 2) a power-orientated, state-centered realist IPE approach on trade politics, asking whether powerful states are pushing or blocking the green transition; 3) critical green approaches on green trade as the product of structurally unsustainable transnational hegemony, and 4) constructivist IPE approach, focusing on the social, epistemic construction of what green trade is and how to promote it, such as ideas justifying particular trade policies, and societal compromises underpinning what policies to pursue. The various approaches are linked to the throughout the course.

Students will be required to write a case-based assignment on ‘the green transition’ and an assignment including reflections on theory, approaches and concepts relating to the theme of the course.