Monthly Archives: December 2015

Seasons greetings/Christmas hiatus

Dear all,

Caribbean Trade Law and Development will be on Christmas hiatus until January 2016. I wish to extend a heartfelt thank you to all for your support of this¬†blog throughout the year and wish you and your families a very Merry Christmas and a wonderful 2016! ūüôā

With best wishes

Alicia

 

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Caribbean exports to decline 23% in 2015, according to IDB Report

Alicia Nicholls

According to the Inter-American Development Bank (IDB)’s newly released Trade Trends Estimates Latin America and the Caribbean 2016 report, ¬†merchandise exports from the Latin America and Caribbean region (LAC) will experience an estimated 14 per cent drop in 2015, the largest since the international financial crisis, while¬†in aggregate¬†Caribbean exports will decline by an estimated 23%.

The Report notes that while in previous years the contraction varied among subgroups of the LAC region, this year’s fall is estimated to affect the entire LAC region. The contraction¬†is driven by “the sharp correction in prices of the principal export products”. The Report notes that China’s imports from the Region declined sharply in the first part of the year but has stabilised in recent months.

The Report also estimates a 10.3% drop in regional imports and a 19% decline in intra-regional imports.

Caribbean performance

According to the Report,¬†total Caribbean countries’ exports will decline 23% in 2015. In Trinidad & Tobago alone, exports are estimated to decline 27%. If¬†Trinidad & Tobago, which accounts for the lion’s share of Caribbean exports, ¬†is excluded, the contraction in the Caribbean is only by 9 percent. For most countries exports to the Caribbean’s main export markets, the US, EU and the regional market, declined.¬†Barbados is an interesting case; it bucks the regional trend as its exports to both the US and the EU have risen. The island’s estimated 5% drop in exports is mainly due to the decline in intra-regional shipments.

To read the full report, please click here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade.  You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Human Development Report 2015 ‚Äď A Mixed Bag for Barbados and the Caribbean

Alicia Nicholls

The United Nations Development Programme (UNDP) released its Human Development Report 2015 yesterday. Entitled “Work for Human Development”, this year’s report focuses on the link between work and human development. ¬†The central thrust of the Report is that work (not limited to a job or employment but in the broadest sense) can enhance human development. However, the link between income and human development is not automatic. While¬†sustainable work can contribute to human development, some types of¬†work (such as work which violates human rights)¬†are detrimental to¬†human development.

The Human Development Index 2015, the Report’s flagship index, ranks 188 countries based on a range of human development indicators. Norway again topped the HDI rankings with an HDI value of 0.944, followed by Australia, Switzerland, Denmark and the Netherlands which retained their top 5 positions in the same order as in 2013. Niger was the lowest ranked country with an HDI of 0.348.

Caribbean Performance 

Caribbean countries continue to have a high level of human development. However, their performance in the 2014 HDI rankings was mixed. Barbados, Jamaica, Cuba, Dominica, Haiti and Suriname declined slightly from their 2013 rankings. The Bahamas, Antigua & Barbuda, Trinidad & Tobago, St. Lucia and Guyana maintained their positions. Only four countries: Dominican Republic, St. Kitts & Nevis, Grenada and St. Vincent & the Grenadines improved their ranking. The biggest improver was Grenada which jumped from 82nd position in 2013 to 79th position in 2014, with improvements in life expectancy at birth and mean and expected years of schooling.

Countries on the HDI are classified by development level into one of the following categories: very high human development, high human development, medium human development or low human development. The majority of Caribbean countries are ranked as having high human development.

The Bahamas has the highest level of human development in the Caribbean, maintaining its 55th place overall and increasing in HDI value from 0.786 in 2013 to 0.790 in 2014. Barbados has the second highest human development level in the Caribbean, dropping one place from 56 in 2014 to 57 in 2015 but maintaining an HDI of 0.785.

The other Caribbean islands included in the High Human Development rank were: Antigua & Barbuda (58), Trinidad & Tobago (64), Cuba (67), Saint Kitts & Nevis (77), Grenada (79), Saint Lucia (89), Dominica (94), Saint Vincent & the Grenadines (97), Jamaica (99), Belize (101), Dominican Republic (101) and Suriname (103).

Guyana which ranked at 124 is the only Caribbean country ranked in the Medium Human Development category. Haiti was the lowest ranked Caribbean country with a rank of 163 and an HDI value of 0.483. It is the only Caribbean country in the Low Human Development category.

When compared to the HDI values of SIDS on average (0.660) and the average world HDI of 0.711, the performances of the Bahamas, Barbados and Antigua & Barbuda are especially commendable.

Room for Improvement

However, Caribbean countries should not take their rankings at face value as a reason for complacency. Drilling down into the HDI indicators and in the other indices comprising the report, there are several areas of concern and where improvement is needed. HIV prevalence among adults remains high in the region compared to other SIDS and the world. The Report also reaffirms the high vulnerability of Caribbean populations to natural disasters.

Another worrying statistic is the high prison population per 100,000. Saint Kitts & Nevis had the highest per capita prison population in the region with 714 prisoners per 100,000. Crime is also an area for concern. For the period 2008-2012 Belize had the highest homicide rate among CARICOM countries, with 44.7 homicides per 100,000. Violence against women also raises concern. For Barbados and Jamaica, two of the handful of Caribbean states for which this  data was available, 30 per cent and 35 per cent of women (15 years and over) respectively have experienced intimate or intimate partner violence.

Many Caribbean countries are seeing declining private capital inflows as a percentage of GDP and have also¬†seen a decrease in their GNI per capita.¬†Barbados‚Äô GNI per capita decreased by about 0.8 per cent between 1980 and 2014. Jamaica‚Äôs decreased by about 32.5 percent¬†during the same period. On the contrary, Grenada’s GNI per capita¬†increased by about 124.6 per cent.

Another area for improvement is in gender equality. Despite females in Barbados having a higher level of human development than males due to their higher life expectancy at birth, longer expected years of schooling and mean years of schooling for females,¬†GNI per capita is much higher for males (10,407 for females and 14,739 for males). ¬†Moreover, while a higher percentage of Barbadian women than men have at least a secondary level education, women¬†have a lower participation in the workforce and make up only 19.6% of seats in Parliament. Therefore, despite a ranking of 57 on the HDI,¬†Barbados ranks 69 out of 155 countries on the Report’s Gender Inequality Index. In comparison, the Bahamas is ranked at 55 on the HDR and ¬†58 on the GII.

Maternal mortality ratios in the Region remain a cause for concern.¬†Haiti’s rate is 380 maternal deaths per 100,000 live births. Though much lower than Haiti’s, Trinidad & Tobago’s¬†maternal mortality ratio of¬†86 per 100,000 and¬†Cuba and Jamaica’s¬†of¬†80 per 100,000 ¬†are above the average rate for SIDS of 61.5 per 100,000 live births¬†and above the average for¬†high human develoment¬†countries (41 per 100,000). Barbados’ ratio of 52 maternal deaths per 100,000 births is also worrying.

Youth unemployment is a¬†growing problem¬†globally and in the region exacerbated by the global recession of 2008 and the continuing uncertainty in the global economy.¬†According to the HDR report, the global¬†youth-to-adult unemployment ratio is at a historical peak and in 2015, 74 million young people (ages 15- 24) were unemployed. Youth unemployment data¬†was not available for all Caribbean countries.¬†However, the available data in the report is troubling.¬†For example, according to the report, Trinidad & Tobago’s rate of youth (not employed or not in school) was 52.5%.

For too many indicators, there is lack of data available for Caribbean countries.  It is for this reason that we have no idea of how Caribbean countries would rank on the inequality-adjusted human development index which gives a truer measure of human development as it takes into account inequality. Lack of data makes it difficult to track progress.

Despite a mixed performance in 2014, the Caribbean¬†Region continues to enjoy overall high levels of human development. However, there are several areas of concern which policymakers will have to target if our countries¬†are to¬†reach the ranks of “very high human development”.

The full Human Development Report 2015 may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Upcoming WTO Ministerial in Nairobi: Does the COP21 offer any lessons for progress?

Alicia Nicholls

Coming on the heels of the successful conclusion of a not perfect but monumental Paris Agreement at COP21 setting the framework for post-2015 global cooperation on climate change, the eyes of the world have now turned to another sphere of international cooperation this week ‚Äď trade. On December 15-18th trade ministers and delegates from over 160 World Trade Organisation member countries will gather in Nairobi, Kenya, for the WTO‚Äôs tenth annual Ministerial Conference.

The Nairobi Ministerial seeks to be a turning point in the currently deadlocked multilateral trade negotiations. While climate change and trade are two related but separate issues, the success at Paris causes one to wonder whether there are any take-away lessons from COP21 that can be used in achieving a substantive outcome in Nairobi.

In July Director General of the WTO, Roberto Azevedo lamented the lack of sufficient progress to deliver a work programme on the remaining issues of the Doha Development Agenda (DDA) by the 31 July deadline. More recently on December 11,  he noted while there were no deliverables for Nairobi, there was some hope that hard work could lead to some potential outcomes; a package of measures for Least Developed Countries (LDCs), an agreement on export competition in agriculture, special safeguard mechanisms and public stockholding for food security purposes. Even so, agreement will not be easy. Some states have also been working on plurilateral agreements which include the Trade in Services Agreement (TISA), the Information Technology Agreement-2 (ITA-2) and the Agreement in Environmental Goods and Services.

The Paris Agreement was finalised after two intense weeks but was twenty years in the making. Like the pathway to the conclusion of the Paris Agreement, the pathway towards what we all hope will eventually be a final Doha Agreement one day has been one fraught with frustration, failure,  missed deadlines and sparse successes here and there.

The 10th Ministerial will be the sixth ministerial conference to have been held since the Doha Agenda was launched at the 4th Ministerial in Doha, Qatar in 2001. The Doha Agenda encompasses an ambitious set of 21 issues, including¬†agriculture, non-agricultural market access (NAMA), anti-dumping, subsidies and safeguards, cotton, dispute settlement, e-commerce, the environment, government procurement and information technology agreements, intellectual property, LDCs, services and trade facilitation.¬† Agreement is¬†to be achieved by consensus (agreement by all) and¬†all of the negotiations¬†are to be treated as components of¬†a ‘single undertaking’, although there is also legal provision for an early harvest under Paragraph 47 of the Doha Ministerial Declaration.

Nearly fifteen years after the start of negotiations, there has been little success to show. The notable exception is the Trade Facilitation Agreement which was concluded at the Bali Ministerial in 2013 and which has only been ratified by 57 of the WTO‚Äôs 162 members to date. There are also draft decisions like those on e-commerce and on assisting the integration of small economies to be adopted at the Ministerial this week. LDCs also scored some victory as the TRIPs Council¬†extended until January 2033 the period during which key provisions of the TRIPS Agreement do not apply to pharmaceutical products in LDCs. But when considered against the ambitious scope which Doha had set for itself, these ‚Äúsuccesses‚ÄĚ are not even a tip of the iceberg.

High level of symbolism

In both the COP21 and upcoming Nairobi Ministerial there is a level of symbolism attached to the points in time in which they are being held. In Paris, the delegates recognised that now more than ever was the opportunity for an agreement on a framework for climate change cooperation before it was too late to reverse course.

Turning to the upcoming WTO Ministerial, not only is this the twentieth anniversary of the WTO’s existence but the first time that a WTO Ministerial will take place on the African continent. President Kenyatta’s message sums up well the hopes that African countries, which comprise 43 of the WTO’s member states, have about the significance of the WTO’s first ministerial in Africa:

‚ÄúThis Ministerial Conference will be the first to take place on African soil, a historic occasion, which will do much to help further integrate the African continent into the global trading system.‚ÄĚ

Less optimistically, the Nairobi Ministerial  comes against the backdrop of a slowdown in global trade growth and within an uncertain global economy. Given the important role of trade in the global economy, any further movement on the negotiations front would be a positive signal.

Diverse set of countries

COP21 had brought together 196 countries ranging the gamut from small island developing states (SIDS), landlocked states, to industrialised nations to least-developed countries (LDCs).

Similarly, the¬†WTO‚Äôs membership, which will increase to 164 with the accession of two LDCS Afghanistan and Liberia, comprises a geographically diverse set of states whose varying interests and perspectives can be seen from just a cursory look at the various negotiating groups. This makes achievement of consensus on such a wide range of issues even more elusive. Large developing countries like India and China are now major players in global trade which has compelled some¬†developed countries to object to their continued classification as “developing” countries.

Developmental thrust but diverging interests

In the COP21 negotiations there were several thorny issues which at some stage seemed irreconcilable. Compromise was eventually achieved in the final text. Likewise, the paralysis in the Doha Round is due to entrenched positions by both developed and developing countries on politically sensitive issues. In summary, developing nations believe that the demands by developed nations are not taking into account their development levels and objectives, while developed nations argue developing nations are not being ambitious enough in their commitments. An unfortunate consequence therefore is that members have been taking advantage of the issue-linkages by tying outcomes in one area to negotiations in other areas.

The Chairman of the Agriculture Negotiating Group reported as of December 7 that ‚Äú[d]espite the intensive consultations and progress made, there is still no appreciable convergence on any of the issues Members are working on, with a limited exception in the case of cotton‚ÄĚ.

Agriculture is one of the most politically sensitive issues for states and the major issues surround public stockholding, export competition, domestic support and access and the special safeguard mechanism. Any binding commitments on these issues are not simply words on a paper but will have implications for developing countries‚Äô local farming industries, their rural poor and food security. The G-33 proposal reintroduced in November 2014 has again argued that public stockholding for food security purposes should be designated as subsidies that cause no or minimum trade distortion, the so-called ‚ÄúGreen Box‚ÄĚ which are except from ceilings or reductions. The ‘peace clause’, which India was able to secure at the Bali Ministerial, is only a temporary solution.¬† The G-33 also call for a special safeguard mechanism in agriculture whereby developing countries, with special flexibilities given to LDCs and SVEs, can temporarily raise tariffs on farm goods in response to any sudden import surges or price reductions. However, according to the latest Chairman‚Äôs report, other Members are opposed to the ‚Äúidea of an outcome on SSM at MC10 in the absence of a broader outcome on agriculture market access‚ÄĚ. Members are also still unable to come to any form of consensus on the issue of domestic support and market access.

Another issue of importance to developing countries, including SVEs, is on improved flexibilities for tariff cuts in NAMA. They have been successful so far in having the current draft negotiating text (Rev.4) contain explicit mention of SVEs and specific treatment in market access, domestic support and export competition. However, the Chairman of the NAMA negotiating group reported on December 7 that ‚Äúreal progress on NAMA has remained elusive since the 9th Ministerial Conference in Bali‚ÄĚ and that negotiations and ambition in NAMA appear to be linked to the agriculture negotiations.

There are 48 WTO members which are LDCs, 33 of which are African states. Critically for LDCs would be the completion of a package of measures specific to LDCs which provides duty-free, quota-free market access for LDC cotton and cotton products, DFQF access to 100% of products originating from LDCs and preferential rules of origin which would ensure that LDCs can take advantage of any market access concessions. The Ministerial Conference in Bali in 2013 had called on developed country members, which had not yet done so, to provide DFQF access to least 97% of products originating from LDCs. Most countries provide some DFQF access to LDC goods, including China and India, but these are still far short of the requirement and less than the 100% which years ago Millennium Development Goal 8 had called for.

For Small Vulnerable Economies (SVEs), besides work on the work programme for SVEs and recognition of their unique challenges through greater flexibilities and longer commitment periods, a key issue is on rules for fisheries subsidies. The fishing industry is important for SVEs as a source of food and nutrition, economic livelihood, community stability and as a contributor to GDP. Africa, Caribbean and Pacific (ACP) countries tabled a proposal which includes areas on fisheries subsidies to be addressed, including IUU fishing. The fisheries subsidies are being negotiated in the Rules Negotiations which also includes the issues of anti-dumping and countervailing measures. The Chairman Report notes that some links have been drawn by Members between outcomes in anti-dumping and fisheries while there is disagreement as to the inclusion and scope of transparency rules as a focus of the negotiating group’s work and as an outcome of the Rules negotiations. Progress on service negotiations has been non-existent for some time.

Need for compromise

As shown, there is a wide range of outstanding issues to be discussed at Nairobi and consensus must be reached on all for there to be any agreement. On most fronts, there are wide cleavages between negotiating positions which seem almost impossible to be bridged. Wide divergences existed in the COP21 negotiations as well, particularly on the issue of the target limit for temperature increase, loss and damage and climate finance. However, in the end what made the Paris Agreement achievable was compromise.

Are¬†WTO members willing to compromise to achieve outcomes? In many cases, it does not appear so.¬†As it stands, there seems to be a splintering of opinion on whether the Doha Agenda should be¬†pursued as the framework for the post-2015 trading agenda. ICTSD Bridges reported developing countries as expressing concern that developed countries have indicated that they ‚Äúwould not join a consensus on a Nairobi declaration that reaffirms the Doha declaration or subsequent ministerial communiques that mention the ongoing Doha Round of talks‚ÄĚ. ¬†Moving away from the Doha Agenda, an agenda which is developmental in its outlook, is a move which developing countries should not support. Among other things the Doha Ministerial Declaration reaffirms parties commitment to the objective of sustainable development, confirms that technical cooperation and capacity building are core elements of the development dimension of the multilateral trading system, reaffirms that provisions for special and differential treatment are an integral part of the WTO Agreements and agrees to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies.

There has also been calls by developed countries for¬†an expansion of the current negotiating agenda to include the “Singapore” issues of competition policy, investment measures and government procurement and newer issues which take into account the growing digital economy.¬†Developing countries are firmly against the inclusion of any extra issues, especially the “Singapore” issues, out of fears that any binding obligations in these areas would further erode policy space. Others fear that their limited capacity to implement obligations on these areas would put them at risk of having claims brought against them in the WTO dispute settlement mechanism. Moreover, developing countries are also against the widening of the agenda to include any additional¬†areas when developed countries have shown little interest in compromising on existing areas such as on the large agricultural subsidies they give to their farmers.

Frustration with the deadlock in¬†the Doha¬†negotiations has led to an increase in regional¬†trade negotiations, evidenced by the trend¬†towards¬†‘mega regional trade agreements’ such as the recently concluded Trans-Pacific Partnership Agreement.¬†While I do not necessarily see these mega agreements as threats to the multilateral trading system, the¬†growing frustration with the current negotiations¬†makes the need for Nairobi to be a turning point even more critical.

The way forward?

The Paris Agreement is by no means perfect but has been endorsed by both developed and developing states. The key success factors at the COP21 which led to an agreement were a shared vision that the sustainable future of the world depended on a deal at that moment, a group of States which were prepared to accept nothing less than a deal which put the planet and their survival first, and the political will on the part of all States to put aside narrow political and national interests to come up with a meaningful agreement, even where that necessitated some compromise on politically sensitive issues.

In the case of the Nairobi Ministerial, some of these factors exist. This year is the twentieth anniversary of the WTO’s existence. There is recognition at least in principle that actions taken at Nairobi will affect the course of the global trade agenda and that the first WTO ministerial conference on African soil is the opportune moment for pushing for outcomes which will go a long way in integrating African countries into the global trading system. Moreover, developing countries, including African LDCs, have insisted and continue to insist that any outcomes must be developmental in focus. The requirement of consensus means that compromise by both developed and developing countries will be necessary to bridge the wide gaps between members’ negotiating positions but not where such compromise defeats development objectives. Any Nairobi outcomes must be ambitious but fair, global in outlook but take into consideration the vulnerabilities and capabilities of developing countries (particularly SVEs and LDCs) and complement the post-2015 sustainable development agenda. In the end, as always, it will all come down to political will.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

St. Lucia and Grenada ratify WTO Trade Facilitation Agreement

Alicia Nicholls

Just a week¬†shy of the commencement of the WTO’s 10th Ministerial Conference in Nairobi, Kenya, St. Lucia and Grenada became the first states of the¬†Eastern Caribbean Economic Union (ECCU) to ratify the World Trade Organisation’s Trade Facilitation Agreement.

The TFA, which has the¬†potential to increase global merchandise exports by up to $1 trillion per annum (according to the¬†World Trade Report 2015),¬†aims to¬†expedite the movement, release and clearance of goods, including goods in transit¬†and to provide¬†measures for effective cooperation between customs¬†authorities.¬†It is the first WTO agreement to link implementation to countries’ capacity to implement. ¬†In November 2014,¬†WTO members adopted a Protocol of Amendment to insert the TFA¬†Agreement into Annex 1A of the WTO Agreement.¬†Both countries have already notified their Category A commitments pursuant to the Agreement.

St. Lucia and Grenada also join Trinidad & Tobago, Belize and Guyana to make it a total of five CARICOM states which have ratified the Agreement so far. Late last month Guyana became the 53rd state to ratify.

For the TFA¬†to enter into force, ratification by two-thirds of the WTO’s membership of 162 is required.This week Cote de Ivoire and Kenya also ratified the Agreement, becoming the fifth and sixth African countries to do so. This brings the number of ratifications to 57 states, which is more than half the number needed¬†for the Agreement to enter into force.

The ratification by St. Lucia and Grenada are a welcomed development and it is hoped more CARICOM states will follow suit. My article on the benefits of the TFA for small island developing states can be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

 

COP21 Paris Agreement: A Partial but Important Victory for SIDS and the World but just the beginning

Alicia Nicholls

Some two decades in the making, delegates from 196 countries around the world made history today by voting to adopt the Paris Agreement to the United Nations Framework Convention on Climate Change (UNFCCC), an internationally binding framework for the post-2015 global climate agenda.

Getting ten people in a room to agree on something is a challenge in itself, far less getting delegates from almost 200 countries with different interests, perspectives and levels of development to agree on an international strategy for tackling climate change. Going into the COP21 there was broad international consensus on the closing window for reversing the deadly course towards unsustainable high levels of global temperature increase and general recognition that while small island developing states (SIDS) contributed little to the problem of climate change, they are the ones which are already suffering the most devastating effects of climate change. However, drilling down into the key issues there were thorny areas of divergence which led to several compromises in the final text.

My personal view, which I will argue in this article, is that while the Paris Agreement is by no means perfect, the fact that parties were able to actually achieve an agreement and its inclusion of many of the concerns which SIDS have advocated for even in compromise form in some cases, makes it a partial but important  first step for tackling what has been recognised as one of the greatest threats to our sustainable future.

Long Term Temperature Increase Target of 1.5 degrees Celsius

A major victory and negotiating point for SIDS through its campaign ‚Äú1.5 to stay alive‚ÄĚ was for commitment by parties to hold the increase in global average temperature to no more than 1.5 degrees Celsius above pre-industrial levels. In support of its negotiating position, SIDS relied on the Structured Expert Dialogue on the 2013-2015 Review of the long term global temperature goal which argued that the global consensus of limiting the increase in average global temperatures to 2 degrees Celsius was inadequate and would threaten the sustainability of both SIDS and low-lying coastal States. This was a sticking point in the negotiations. In the end at article 2(1)(a) the Paris Agreement parties agreed to a compromise position which aims to hold¬†the increase in the global average temperature to well below 2 ¬įC above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 ¬įC above pre-industrial levels. While this is not entirely what SIDS were hoping for it is a lot¬†more ambitious than¬†what most had expected.

Recognition of Loss and Damage

Another major issue for SIDS was for the agreement to establish an international mechanism to address loss and damage which is treated separately from adaptation. They relied again on the findings of the Structured Expert Dialogue on the 2013-2015 Review which showed that even in low emission scenarios SIDS will still experience substantial loss and damage. As such they argued for recognition by industrialised States of liability and compensation. The worst greenhouse gas emitters US, China and the EU countries were absolutely against any form of compensation or liability.

Article 8 of the Paris Agreement is a mixed victory for SIDS in that parties¬†recognize the importance of “averting, minimizing and addressing loss and damage associated with the adverse effects of climate change”. The Warsaw International Mechanism for Loss and Damage, established at COP19 in 2013,¬†will be one of the mechanisms for facilitation and cooperation and¬†may be enhanced or strengthened as determined by the Parties represents a compromise on the issue of loss and damage. However, in paragraph 52 of the preamble it includes that Article 8 “does not involve or provide a basis for any liability or compensation”.¬†This is likely a compromise for those countries which opposed inclusion of any liability or compensation. While this is a weakness, it is likely this will not be the end of this issue and that SIDS will continue to push for this in the¬†reviews.

Climate Finance

Even though developed States pledged to mobilise USD 100 billion dollars a year in financing for climate change, SIDS have continuously argued about the limited financial resources which have actually been made available to assist in their mitigation of, and adaptation to, climate change. In Article 9, developed country Parties agreed to scale up efforts to provide financial resources to assist developing country Parties with respect to both mitigation and adaptation and should continue to take the lead in mobilizing climate finance from a wide variety of sources, instruments and channels. Other Parties are encouraged to provide or continue to provide such support voluntarily. Developed countries are to report on support on a biennial basis. Other Parties  are to do so voluntarily. The Financial Mechanism of the Convention is to serve as the financial mechanism for the Paris Agreement.

In paragraph 115 of the preamble, developed country Parties are to scale up their level of financial support with a goal of USD 100 billion annually by 2020 for mitigation and adaptation. Interestingly, this bit about the USD100 billion is included in the preamble to the Agreement and not as a binding provision within the text itself which has an impact on its enforceability. A stronger more robust provision would have been desired.

Technology Transfer and Capacity-building support

SIDS were insistent on the inclusion of adequate provisions for adaptation to assist them in their adaptation to climate change, including provisions on technology transfer and capacity-building support. Technology transfer is referenced both in the preamble and the actual text of the Paris Agreement. Article 10 of the Agreement requires parties to strengthen cooperative action on technology development and transfer. A Technology Mechanism and Technology Framework have been established under the Agreement to facilitate this, although the text does not detail how this technology transfer is to occur. Support, including financial support, is to be provided to developing country Parties for implementation. Article 11 of the Agreement itself does not speak to how capacity building is to take place but leaves it up the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement to consider and adopt a decision on the initial institutional arrangements for capacity-building at its first session. It will be up to SIDS to keep pushing for further support for technology transfer and capacity-building support.

Voluntary Greenhouse Gas Emission Reductions

Though the parties recognise in the preamble that deep reductions in global emissions will be required in order to achieve the ultimate objective of the Convention and Article 4(4) of the main text requires developed country Parties to continue taking the lead by undertaking economy-wide absolute emission reduction targets, generally speaking the provisions on greenhouse gas emission reductions are voluntary, vague and crafted mostly in best endeavour language and not in the robust language climate activists and SIDS were hoping for.

Under Article 4(1) parties are to aim to reach global peaking of greenhouse gas emissions ‚Äúas soon as possible‚ÄĚ. Each Party is to prepare, communicate and maintain successive nationally determined contributions that it intends to achieve (Article 4(2)), with the further conditions that there should be progression in each of its contributions and that they should reflect its highest possible ambition. These are to take into consideration each country‚Äôs national circumstances and on the principle of differentiated responsibilities.

A mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development has been established under the authority and guidance of the Conference of the Parties. However, it is unclear how this is to work. One positive point though is that a share of the proceeds from activities under the mechanism are to be used to cover administrative expenses and to assist developing country parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation. Again, however, the specifics on how this will be done will have to be subsequently fleshed out.

Stocktaking/Five Year Reviews

SIDS were adamant that any agreement should include provisions for five-year review cycles of greenhouse gas emissions targets to assess the collective progress towards achieving the long term goal of a 1.5 degrees Celsius target with the first review to take place before 2020. The Conference of the Parties serving as the meeting of the Parties to the Paris Agreement agreed to five year reviews after 2023, but with inclusion of ‚Äúunless otherwise decided‚ÄĚ. Additionally, unlike the ‚Äúbefore 2020‚ÄĚ recommendation made, the parties agreed to a first global stocktake in 2023. Here again the Paris Agreement features a compromise but is a major win for small states as it allows for periodic reviews so adjustments can be made to ensure the goal of 1.5 degrees is reached.

Legally Binding

Much ado has been made about whether it would be a legally binding Agreement. This discussion was quite moot as Article 2(1)(a) of the Vienna Convention on the Law of Treaties defines a treaty as ‚Äúan international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation‚ÄĚ, while Article 26 further provides that ‚Äúevery treaty in force is binding upon the parties to it and must be performed by them in good faith‚ÄĚ. For domestic ratification¬†reasons, the¬†US position however is that it is not a treaty. Because of the concept of separation of powers, a treaty would require Congressional approval which, given the current composition of the US Congress and the strong oil and coal lobbies, is unlikely to receive congressional approval.

Transparency

Article 13 of the Paris Agreement establishes an ‚Äúenhanced transparency framework for action and support with built-in flexibility which takes into account Parties‚Äô different capacities‚ÄĚ. The Transparency Framework established under the Agreement is to build on the transparency arrangements already established under the UNFCCC Convention and there is to be frameworks for transparency to action and transparency of support.Parties are to regularly provide information a national inventory report of anthropogenic emissions by sources and removals by sinks of greenhouse gases and information necessary to track progress made in implementing and achieving¬†their¬†nationally determined contribution under Article 4. However, it does not state how often is ‚Äúregularly‚ÄĚ. There are also reporting obligations in regards to financing and technology provided and received.

The technical expert review provided for under Article 13 is to consist of a consideration of the Party’s support (as relevant), its implementation and achievement of its nationally determined contribution, identification of areas of improvement for the Party, and include a review of the consistency of the information with the modalities, procedures and guidelines referred to in paragraph 13 of the Article. The review is to pay particular attention to the respective national capabilities and circumstances of developing country Parties.

Compliance and Enforcement

The key issue is not whether it is a legally binding agreement but its enforcement of compliance. The greatest weakness of the Agreement is that many of its major provisions are drafted in hortatory ‚Äėbest endeavour‚ÄĚ language as well as its enforceability and policing given its weak compliance mechanism. Article 14 establishes an expert-committee based mechanism to facilitate implementation of the agreement and compliance with its provisions. However, the fact that it is to be facilitative and ‚Äúnon-punitive‚ÄĚ means it is not envisaged to be an enforcement mechanism which actually has ‚Äúteeth‚ÄĚ and would probably be little more than a ‚Äúname and shame‚ÄĚ mechanism. The actual modalities and procedures of this committee are to be decided by the Conference of the Parties meeting as the Parties to the Paris Agreement when they have their first session.

Just the Beginning

In light of the many compromises and vague language in many of provisions, the Agreement is by no means a perfect one and aspirational rather than binding in many of its key provisions. It is, however, a lot better than what it would have been had it not been for the strong defence by SIDS, through the Alliance of Small Island States (AOSIS), of their interests. In light of previous failures and two decades of often challenging climate change negotiations, the fact that we finally have an agreement, which though not perfect, balances interests in a way that is fair and incorporates most of SIDS concerns, is an important victory for SIDS and the world. It recognises the principle of differentiated responsibility and makes some mention of the special vulnerability of SIDS in various provisions. Another positive aspect is that Article 27 provides that no reservations may be made to the Agreement.

The Paris Agreement represents a turning point towards a new post-2015 global plan for climate change adaptation and mitigation. The real test will be in its ratification and implementation. Pursuant to Article 21, at least 55 Parties to the Convention accounting in total for at least an estimated 55 percent of the total global greenhouse gas emissions, have to ratify the Agreement for it to come into force. The US will be a critical case to watch as if it is seen as a Treaty, which it indeed is, Congressional approval will be needed and such approval appears unlikely. No one wants a repeat of the Kyoto debacle.

There is scepticism about whether the ‚Äú1.5 degrees Celsius‚ÄĚ target can actually be reached. Indeed, the INDC Synthesis¬†report released by the UNFCCC Secretariat and which captured the overall impact of national climate plans covering 146 countries as of 1 October 2015, showed that the current INDCs have the capability of limiting the forecast temperature rise to only around 2.7 degrees Celsius by 2100, which still does not support the 2 or 1.5 targets. The review mechanism provides the opportunity to review national climate plans to bring them into this target. SIDS will need to continue their advocacy and use the review mechanisms provided for under the Agreement to continue to hold major emitters to account.

While it is easy to bask in the euphoria of this historic agreement, the world cannot take this moment for granted by resting on its laurels. Now the real work on a low carbon economy begins.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Final Draft Paris Agreement in a Nutshell

Alicia Nicholls

The final draft of the Paris Agreement of the United Nations Framework Convention on Climate Change (UNFCCC) has been released. So far the reaction from the international community and from global civil society has been largely positive but with some reservations that the Agreement does not go far enough.

Delegates will be voting shortly on whether to adopt the Agreement. Though 31-pages long, the actual Paris Agreement itself (minus the preamble) is just 11 pages long. The key points in the final draft text are:

  • Long-term temperature increase target: Parties agree to aim to hold¬†the increase in the global average temperature to well below 2 ¬įC above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 ¬įC above pre-industrial levels. This appears to represent a compromise position between small island developing States‚Äô position of 1.5 degrees Celsius and the general international consensus of 2 degrees Celsius. It is not entirely what SIDS were hoping for but it is a lot more ambitious than the alternative.
  • A mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development¬†has been¬†established under the authority and guidance of the Conference of the Parties. A¬†share of the proceeds from activities under the mechanism are to be used¬†to cover administrative expenses and to assist developing country¬†parties¬†that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation.
  • Recognition of Loss and Damage: Parties recognize the importance of averting, minimizing and addressing loss and damage associated with the adverse effects of climate change. The Warsaw International Mechanism for Loss and Damage, established at COP19 in 2013, will be one of the mechanisms for facilitation and cooperation and¬†may be enhanced or strengthened as determined by the Parties. A weakness is that it includes that this “does not involve or provide a basis for any liability or compensation”.
  • Emissions reductions:¬†In order to achieve the long-term temperature goal set out, Parties agree to aim to reach global peaking of greenhouse gas emissions as soon as possible, recognizing that peaking will take longer for developing country Parties¬†and to undertake rapid reductions thereafter in accordance with best available science. The aim is¬†to “achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century”.
  • Climate Finance: A USD 100 billion dollar floor.¬†Developed country Parties¬†agreed¬†to scale up efforts to¬†provide financial resources to assist developing country Parties with respect to both mitigation and adaptation and¬†should continue to take the lead in mobilizing climate finance from a wide variety of sources, instruments and channels.¬†Other Parties are encouraged to provide or continue to provide such support voluntarily. Developed countries are to report on¬†support on¬†a biennial basis. Other Parties ¬†are to do so voluntarily. The Financial Mechanism of the Convention is to serve as the financial mechanism for the Paris Agreement.
  • Technology Transfer: Parties are to¬†strengthen cooperative action on technology development and transfer. A Technology Mechanism and Technology Framework have¬†been established under the Agreement to facilitate this.¬†Support, including financial support, is to¬†be provided to developing country Parties for¬†implementation.
  • Capacity-building: The Conference of the Parties serving as the meeting of the Parties to the Paris Agreement is¬†to¬†consider and adopt a decision on the initial institutional arrangements for capacity-building at its first session.
  • Transparency Framework: The Agreement establishes¬†an enhanced transparency framework for action and support which takes into account Parties‚Äô different capacities.
  • Stocktaking/Five Year Reviews:¬†The Conference of the Parties serving as the meeting of the Parties to the Paris Agreement shall undertake its first global stocktake in 2023 and every five years thereafter unless otherwise decided. This was a major win for small states.
  • Compliance Mechanism:¬†A mechanism to facilitate implementation of and promote compliance with the provisions of this Agreement has been¬†established which will¬†consist of a committee that will¬†be expert-based. However, the fact that it is to be¬†facilitative and “non-punitive” in nature ¬†raises questions about enforceability.
  • Reservations Policy. No reservations may be made to the Agreement.

The full text may be accessed here.

My full article analysing the agreement can be accessed here: The COP21 Paris Agreement: A Partial but Important Victory for SIDS and the World But Just the Beginning 

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

 

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