The WTO Law on Subsidies and Climate Change: Overcoming the Dissonance?

Research output: Contribution to journalArticle


The worrisome rise in the number of trade disputes relating to climate change policies leaves no doubt as to the relevance of WTO law to climate change policies. Perhaps the most contentious aspect of the relationship between trade law and climate change policies is the issue of subsidies — while many climate change policies rely heavily on the use of subsidies, WTO law considers subsidies a distortive force and aspires to limit the use of such measures. This article evaluates the compatibility of several climate change programs in light of the WTO law on subsidies. It argues that the current legal framework is unsuitable for the promotion of climate change abatement objectives. This is because relevant considerations such as the urgency of the climate change problem, the many market failures embedded in climate-friendly goods and services, and the political reality currently abundant in many states, are entirely disregarded by the WTO law on subsidies. The recent Canada FIT Panel and Appellate Body Reports seem to accept this critique, and consequently present a modified approach to the interaction between the WTO law on subsidies and the climate change challenge. Another promising route of action can be found in the model reflected in an agreement recently concluded between the EU and China, in which, prima facie, the parties decided to include non-commercial considerations as relevant for their own trading relations. These two recent developments may signify a change in the approach towards the interaction between trade law and climate change, as well as a realisation that the current legal framework should be re-evaluated
Original languageEnglish
Pages (from-to)344-382
Number of pages39
JournalTrade, Law and Development
Issue number2
Publication statusPublished - May 2014

Cite this