Caribbean Trade Law and Development

Category: Climate Change

  • Over 170 Countries Sign the Paris Agreement: What next for SIDS?

    Alicia Nicholls

    Earth Day 2016 was extra symbolic this year. On this day (April 22nd), 174 countries plus the European Union signed the Paris Agreement at a High-Level Signature Ceremony at the United Nations’ Headquarters in New York. Among the signatories were small island developing states (SIDS) from the Caribbean, the Pacific and the Indian Ocean, for whom climate change is a serious matter of survival.

    The Paris Agreement, which will replace the Kyoto Protocol when it comes into force, is a landmark climate change agreement which aims to strengthen the global response to climate change. Many years in the making, the Paris Agreement was concluded and adopted at the end of intense negotiations during the United Nations Framework Convention on Climate Change’s (UNFCCC) 21st annual Conference of the Parties (COP21) held in Paris last December.

    Climate change is a global problem with implications for us all. According to the United States’ National Oceanic and Atmospheric Administration (NOAA) and NASA, 2015 was the hottest year on record since the start of record keeping in 1880. If these first few months of 2016 are anything to go by, this year may shatter that record handily.

    SIDS which are responsible for less than 1% of global GHG emissions, are the most vulnerable to its adverse effects. Besides sea level rise, extreme weather events have caused tremendous economic devastation and loss of human life. The Rapid Impact Assessment showed that Tropical Storm Erika cost Dominica 90% of its gross domestic product (GDP). Earlier this year, the Category 5 Severe Tropical Cyclone Winston ravaged the Pacific SIDS of Fiji, Vanuatu, Tonga and Niue. In Fiji the storm left 44 dead, destroyed over 31,000 homes and caused 1 billion USD in damage.

    For SIDS, climate change is an existential threat to our economies, societies and survival, which led our states to push the “1.5 to stay alive” campaign. To keep the temperature increase to just 1.5 percent above pre-industrial levels or even 2 percent, signature of the Paris Agreement is just one step.

    Signature is not the same as ratification

    The turnout for the signature of the Paris Agreement is reported to be a record number for a new treaty. However, signature does not make a treaty legally binding on a signatory party unless the Treaty specifically provides for this. In the case of most treaties, like the Paris Agreement, it is only after a party has deposited its instrument of ratification (or accession, approval or accession) that it has consented to be bound by the treaty.

    The ease of the domestic ratification process depends on the legal system and domestic political processes in each state. In the US, the type of international agreement determines the process. Article II, section 2 of the US Constitution requires approval of two-thirds of the US Senate for a treaty to be approved. Executive type agreements do not require congressional approval. Given the strong objection to the Paris Agreement in the Republican-controlled Congress, the US negotiators were careful to avoid any language or provisions, such as mandatory emission reduction targets, which would require Congressional approval of the agreement. However, the US has not yet ratified the Agreement and the upcoming US Presidential election this November could lead to a dramatic reversal in US policy on climate change depending on whom is elected president. No one wants a repeat of the Kyoto Protocol; the US had signed it but did not ratify and was therefore not bound by the Agreement.

    According to Article 21, the Paris Agreement will enter into force 30 days after at least fifty-five parties which account for at least fifty-five percent of total global greenhouse gas emissions (GHG) have deposited instruments of ratification. As at the time of writing this article, 177 parties have signed the agreement, which represents the vast majority but not all the 195 countries which negotiated the agreement in December. Conspicuously absent from the  signatures are several major oil producing states, namely Nigeria, Saudi Arabia and Iraq. Signature will be open for one year until April 2017 so there is still time for more states to sign.

    Fifteen countries have so far ratified the Agreement, three of which with declarations. It is no surprise that SIDS led the way in the number of ratifications. Those countries which ratified already are the Marshall Islands, Nauru, Tuvalu, Palau, Somalia, Palestine, Barbados, Fiji, Grenada, St. Kitts & Nevis, Samoa, Maldives, St. Lucia, Mauritius and Belize.

    Scaling Up of Climate Action

    Even before the entry into force of the Agreement, countries will need to scale up their climate actions to reduce emissions. Prior to the conclusion of the Paris Agreement, most countries submitted their Intended Nationally Determined Contributions (INDCs) which set out their policies, targets and actions for contributing to the reduction of GHG emissions. In Barbados’ INDC, for example, the country intends to achieve an economy-wide reduction in GHG emissions of 44 percent compared to its business as usual (BAU) scenario by 2030. In absolute terms, this means an intended reduction of 23 percent compared to 2008 levels.

    However, the just released updated UN synthesis report of all INDCs communicated by Parties by 4 April 2016, a total of 189 Parties (96% of all Parties to the UNFCCC), found that the level of ambition is still not enough to lead to an increase of less than 2 degrees above pre-industrial levels. There is the need to deepen ambitions and convert intention to concrete actions and achievements. This will require planning, political will, cooperation among all stakeholders, the implementation of legislative frameworks and systems for monitoring progress, implementation and reporting.

    Of critical importance will be the level of reduction of GHG emissions  by countries, such as the US, China, India and in Europe, which account for over 50 percent of global GHG emissions. However, domestic politics within these countries could be an issue for meeting their goals. As an example, in August 2015, US President Obama and the US Environmental Protection Agency (EPA) announced the Clean Power Plan to lower US emissions by curbing carbon dioxide emissions from power plants through shifting from coal-fired power to renewable power. Some major fossil fuel producing states like West Virginia and Texas have challenged the administration’s plan and by a 5-4 decision the US Supreme Court issued a stay of the Clean Power Plan pending judicial review. Additionally, there is no guarantee that the next US president will be as committed to the climate change mitigation goals set out by the Obama administration to reduce emissions between 26 to 28 percent by 2025, which already is a modest target.

    Climate Finance for Adaptation and Mitigation

    SIDS require financing not just to build climate-resilient infrastructure but to transition to climate-resilient economies. One of the stated goals in the preamble of the Paris Agreement is to jointly provide USD 100 billion annually by 2020 for mitigation and adaptation, and to provide appropriate technology and capacity-building support.

    Many Caribbean States have been graduated from accessing grants and concessionary loans due to their relatively high gross domestic product per capita (GDP per capita), while their high levels of indebtedness also make borrowing on international markets difficult. While several climate change finance streams are available, including funding from Multilateral Development Banks, official development assistance and dedicated funds, some SIDS Governments have raised concern  that the red tape for accessing funds is often cumbersome.

    What next for SIDS?

    The signature of the Paris Agreement is just but one step. Though SIDS account for less than one percent of GHG emissions, we all have our part to play in lowering emissions and contributing to a climate-friendly future. Domestically, our governments need to focus on implementing our INDC commitments and encourage the use of climate friendly technologies, including in buildings, transportation and the agriculture, tourism and manufacturing sectors. This is not a task for governments alone, but will require continued cooperation with civil society, the business community and ordinary citizens.

    It also requires the continued encouragement of a shift from fossil fuels to renewable energy. In Barbados’ INDC, it was noted that energy consumption accounted for 72% of our GHG emissions in 2008, followed by the waste sector (16%). Disconcertingly, major players in the island’s solar energy industry have complained that falling oil prices have led to a decrease in solar installations. Barbados has been a leader in the solar industry, with a high level of solar water heater use which  saved the country a reported US$100 million on its fuel import bill in 2002. We cannot allow the drop in oil prices to allow us to lose sight of the necessity of shifting from fossil fuels for achieving our climate goals and preserving an environmentally-sustainable future for the next generations.

    On the multilateral level, continued participation and advocacy in climate change talks are a must for SIDS governments. As I had indicated in my previous article, the Paris Agreement is an important step but its efficacy will depend on its ratification and implementation and subsequent follow-up, especially by those countries which contribute the most to GHG emissions. The future of our states, and the world, depends on it.

    The full text of the Paris Agreement may be found here. Barbados’ statement at the High-level signing ceremony may be found 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.

  • WTO Panel rules in US’ Favour in Solar Dispute against India

    Alicia Nicholls

    A World Trade Organisation (WTO) Dispute Settlement Body panel has issued its report in the dispute  India — Certain Measures Relating to Solar Cells and Solar Modules in which the United States challenged the domestic content requirements imposed by India relating to solar cells and solar modules under the latter’s Jawaharlal Nehru National Solar Mission. The Panel found in favour of the US’ view, holding that India’s domestic content requirements were discriminatory and inconsistent with India’s obligations under Article III:4 of the General Agreement on Tariffs and Trade (GATT) 1994 and Article 2:1 of the Agreement on Trade Related Investment Measures (TRIMs).

    The dispute is  one in a growing body of WTO disputes in which one member’s government support programmes for the renewable energy sector (whether local or national) have been challenged by another member as being inconsistent with the former’s obligations under WTO rules. It is therefore not surprising that a long list of countries notified their interests as third parties to this dispute, namely: Brazil, Canada, China, Ecuador, the European Union, Japan, the Republic of Korea, Malaysia,Norway, Russia, Saudi Arabia, Chinese Taipei and Turkey.

    Background

    The Indian Government launched the National Solar Mission (NSM) in January 11, 2010 as one of the eight national missions under India’s National Action Plan on Climate Change (NAPCC). The NSM has the aim to promote the use of solar energy in India, foster energy security and make India a global leader in solar energy. According to the Indian Ministry of New and Renewable Energy’s website, the NSM’s ambition is “to deploy 20,000 MW of grid connected solar power by 2022” and to reduce the cost of solar power generation in India through four key aspects, including domestic production of critical raw materials, components and products.

    At the heart of the dispute, the Indian Government required solar developers (or their successors to the contract) to purchase or use solar cells or solar modules of domestic origin in order to be eligible to enter into and maintain certain power purchase agreements under the NSM.

    The US argued that these domestic content requirements mandated by the Indian Government under Phases I and II of the NSM were discriminatory and inconsistent with India’s WTO obligations. Specifically, the US challenged the measures’ consistency with Article III:4 of the GATT 1994 (National Treatment), arguing that they accord less favorable treatment to imported products than to like domestically produced goods.Additionally, the US argued that these domestic content requirements were trade-related investment measures which fell within paragraph 1(a) of the Illustrative List of the TRIMs Agreement’s annex and were therefore inconsistent with Article 2.1 of the TRIMs Agreement.

    In its defense, India argued that its domestic content requirements at issue were not inconsistent with Article III:4 of the GATT 1994 or Article 2.1 of the TRIMS Agreement. India also sought to rely on the exceptions in  Article III:8(a), Articles XX(j) and/or XX(d) of GATT 1994 (General Exceptions).

    The US requested consultations with India initially in February 2013 and then in relation to Phase II of the NSM in February 2014. A panel was established in May 2014 and the parties agreed to the panel’s composition in September of that same year.

    Ruling

    In its report circulated today, the Panel found in favour of the US’ view. It held that:

    • India’s domestic content requirements in question were trade-related investment measures for the purposes of the Illustrative List in the TRIMs Agreement’s Annex and were therefore inconsistent with Article 2.1 of the TRIMs Agreement.
    • The Panel also found that the domestic content requirements in question do accord “less favourable treatment” within the meaning of Article III:4 of the GATT 1994

    In regards to India’s argument about the government procurement derogation under Article III:8(a) of the GATT 1994, the Panel referred to the Appellate Body’s interpretation of that article in the Canada — Renewable Energy / Feed-In Tariff Program dispute in which the EU had successfully challenged domestic content requirements imposed by the Ontario provincial government in relation to its Feed-In Tariff (FIT) programme. Relying on its interpretation in that dispute, the Panel held that discrimination relating to solar cells and modules under the domestic content measures is not covered by Article III:8(a) of the GATT 1994.

    The Panel also argued that India failed to show that the domestic content requirements were justified under the general exceptions, Article XX(j) or Article XX(d) of the GATT 1994.

    The big picture

    What this dispute and others like it concerning domestic support for renewable energy programmes show is the increasing intersection and conflict between  trade and environmental policy, in particular, trade and climate change policy.It is an issue which is more than moot for small island developing States  like Barbados  (a Caribbean leader in solar energy which aims to become a “green economy”) in regards to how much policy space is available to policy makers to provide support for the advancement of the renewable energy sector in the country without running afoul of the country’s WTO obligations.

    The relationship between trade and climate policy is one of the issues which was discussed at length in the E15 Initiative Report entitled “Analysis and Options for Strengthening the Global Trade and Investment System for Sustainable Development”, particularly in this think piece  considering “the costs and benefits  for adjusting WTO rules to provide additional policy space to mitigate climate change and promote renewable energy”.

    As countries take more aggressive measures in order to meet their national emissions reduction targets in the spirit of the Paris Agreement’s goal to limit the global temperature increase to no more than 2 percent above pre-industrial levels (with the best endeavour goal of 1.5 percent), there is likely to be more conflict between WTO rules and climate change policies in years to come. WTO members will be forced to address ways in which the WTO rules can be flexed to more adequately accommodate members’ climate change mitigation policies, while at the same time ensuring that they are not used as a guise for protectionism.

    For further information on the US-India Solar dispute, please see the  WTO’s case summary and the full Panel Report.

    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.

  • 2015 Year in Review for Caribbean Region: Triumph, Tragedy and Hope

    Alicia Nicholls

    2015 has been a year of both triumph and tragedy for the countries which make up the Caribbean region. This article reviews some of the major political, diplomatic and socio-economic challenges and gains experienced by the Region in 2015, many of which would have been covered on this blog throughout the year. It also speaks to the prospects for 2016.

    Political/Diplomatic issues

    General elections led to changes of government in St. Kitts & Nevis, Guyana and Trinidad & Tobago, while voters in the British Virgin Islands, Belize and St. Vincent and the Grenadines bestowed the incumbent governments with a fresh mandate.  In October Haiti held its first round of presidential elections, as well as local elections and the second round of legislative elections. The second round of presidential voting which was slated to occur on December 27, was postponed indefinitely in December.

    On the international stage, the election of Prime Minister Justin Trudeau in Canada was widely welcomed in the Caribbean Region as possibly heralding a new era in Caribbean-Canadian relations. However, the electoral defeat of President Nicolas Maduro’s United Socialist Party of Venezuela (PSUV) in the Venezuelan legislative elections in December has caused concern in the Caribbean about the future of Petrocaribe, a legacy of the late President Hugo Chavez under which Venezuela provides oil to participant Caribbean States on preferential terms.

    In international diplomacy, the Region had two major triumphs. The first was the historic election of Dominica-born Baroness Patricia Scotland as the first female Secretary-General of the Commonwealth of Nations.  The second was the conclusion by 196 parties of an international climate change agreement in Paris, which though not perfect, paid consideration to the interests and needs of small states.

    The catastrophic human and economic devastation inflicted by Tropical Storm Erika in Dominica in August and Hurricane Joaquin in the Bahamas in September-October, and the prolonged drought and water shortages being experienced across the Region are sharp reminders that climate change is an existential threat to the Region’s survival. Access to climate change finance will be critical in financing Caribbean countries’ mitigation and adaptation strategies. Despite the triumph of small states at Paris, this is only just the beginning and a major hurdle will be the ratification of the Agreement by all parties, critically the US.

    Caribbean low tax jurisdictions’ battle against the tax haven smear made by metropolitan countries continued in 2015 after several Caribbean countries were included in blacklists by the European Union and the District of Columbia. At the 8th meeting of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes held in Barbados in October, there was acknowledgement made that the Global Forum was the “key global body competent to assess jurisdictions as regards their cooperation on matters of transparency and exchange of information for tax purposes”. However, the fight is not over.

    On the international front, the border disputes between Guyana and Venezuela and Belize and Guatemala remain unresolved.  The Guyana-Venezuela dispute came to a boiling point after the announcement that Exxon Mobil Corp had discovered large oil and gas deposits in waters of the disputed region pursuant to a contract made with the Government of Guyana. While CARICOM countries have pledged their support of Guyana’s sovereignty, Venezuela’s more aggressive diplomatic engagement of the region in recent months has raised questions about where CARICOM states’ loyalties will truly reside; with a fellow CARICOM state or with a major financier. To further complicate matters, Suriname, a fellow CARICOM State, has restated its claim to a portion of Guyana’s territory. Indeed, the expeditious and peaceful settlement of both disputes will be important for the economic future of Guyana.

    While the US embargo of Cuba remains despite an overwhelming United Nations vote (191 to 2) yet again in favour of ending it, the United States and Cuba made significant advancements in 2015 in the quest towards “normalization” of relations. These included the easing of several travel and trade restrictions, the mutual re-opening of embassies in August and the announcement in December of an agreement to resume commercial flights between Cuba and US for the first time in more than half a century. The future resumption of air links between Cuba and the US is a welcomed development and instead of simply fearing the impact this will have on their US arrivals, Caribbean States should see this as an impetus to increase their marketing efforts in the US market and to improve the competitiveness of their tourism product.

    Socio-economic issues

    Lower oil and commodities prices have had a mixed impact on the region. They have been a blessing for services-based, import-dependent Caribbean countries struggling to overcome the lingering effects of the global economic crisis on their economies by slightly reducing their import bills and narrowing their current account deficits somewhat. For commodities exporting Caribbean states, however, the impact has been negative. Low oil prices have had a deleterious impact on the Trinidad & Tobago economy which is dependent on the export of oil and petrochemicals and was recently confirmed to be in recession after four consecutive quarters of negative growth.

    The tourism industry, the lead economic driver for most Caribbean countries, saw a strong rebound in 2015 with several Caribbean countries, including Barbados, registering record long-stay and cruise ship arrivals, buoyed by increased airlift and cruise callings and stronger demand from major source markets and lower fuel prices.

    However, the Caribbean continues to confront an uncertain global trade and economic climate. As recently as December, Managing Director of the International Monetary Fund (IMF), Christine Lagarde, was quoted as stating that global growth for 2016 will be “disappointing” and “uneven”. Another arena Caribbean countries must watch is the troubled Canadian economy and the depreciation of the Canadian dollar as Canada is one of the major tourism source markets for Caribbean countries and an important market for Caribbean exports.

    According to an Inter-American Development Bank (IDB) report released in December, Caribbean exports are estimated to decline 23% in 2015, with Trinidad & Tobago accounting for the bulk of the decline. A bright spark is that St. Lucia, Grenada and Guyana signed on to the World Trade Organisation (WTO)’s Trade Facilitation Agreement, joining Trinidad & Tobago and Belize. The on-going reforms being made by these countries pursuant to the Trade Facilitation Agreement should help facilitate and increase the flow of trade in these countries. Barbados, Guyana and Haiti underwent their WTO trade policy reviews in 2015.

    The Caribbean region continues to be one of the most indebted regions in the world. Aside from high debt to GDP ratios, several Caribbean countries continue to face high fiscal deficits, wide current account deficits and sluggish GDP growth. Regional governments will have to continue measures to lower their debt, broaden their exports and lower their import bills.

    In September, the world agreed to the 2030 agenda for sustainable development in the form of the 17 ambitious sustainable development goals and their 169 targets. A critical factor for achieving these goals will be access to financing for development. Caribbean countries already face several challenges in accessing development finance owing to declining inflows of official development assistance, unpredictable foreign direct investment inflows and limited access to concessionary loans due to their high GDI per capita. Caribbean States should continue to vocalize their objection to the use of GNI/GDP per capita as the sole criterion for determining a country’s eligibility for concessionary loans.

    The alarming rise in crime across the Region remains an issue which Caribbean countries must tackle with alacrity not just for the safety of their nationals but for the preservation of the Region’s reputation as a safe haven in a world increasingly overshadowed by terrorist threats. 2015 was a year marked by an escalation in terrorism, with deadly attacks in Egypt, Kenya, Paris and Beirut capturing international headlines. Moreover, the news of recruitment of some Caribbean nationals by ISIL (Daesh as ISIL calls itself in Arabic) is an issue which Caribbean States must confront.

    The growing threat of terrorism has caused some concern about the security and robustness of the Economic Citizenship Programmes offered by some Caribbean countries. St. Kitts & Nevis revamped its programme and in light of the Paris attacks, the Kittitian Government announced in December that Syrian nationals will be immediately suspended from its programme. However, the fact that St. Lucia has forged ahead with the establishment of its own programme, accepting applications from January 1st 2016, shows that some regional governments strongly believe the gains outweigh any potential risks.

    High unemployment and youth unemployment rates continue to be major social issues threatening the sustainability of the Region, with consequential implications for crime and poverty reduction and political engagement.

    Prospects for 2016

    Without doubt there are several issues and challenges which confronted the Region in 2015 and will continue to do so in 2016. Moreover, since the “pause” taken years ago, CARICOM continues to face the threat of regional stagnation and fragmentation. While Dominica must be applauded for signing on the appellate jurisdiction of the Caribbean Court of Justice, it is only the fourth out of fifteen  CARICOM States to have done so nearly fifteen years after the Court’s establishment.

    However, in spite of these challenges the Caribbean Region has several factors still going in its favour, including high levels of human development, well-educated populations, political stability and a large diaspora. These are factors which it should continue to leverage but should not take for granted. No doubt a critical success factor will be the ability of regional governments, individually and together, to formulate effective and innovative solutions to the challenges faced, working towards the achievement of the SDGs, and their ability to mobilize domestic and international resources to finance these solutions. Let us also hope that 2016 will be the year where there will be a greater emphasis on increasing the pace of implementation of the Community Strategic Plan 2015-2019. The unity displayed by CARICOM during the Paris negotiations should be a reminder that the Caribbean is at its strongest when united.

    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 “1.5 to stay alive” 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 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C 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 “as soon as possible”. 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’s 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 “unless otherwise decided”. Additionally, unlike the “before 2020” 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 “an 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”, while Article 26 further provides that “every treaty in force is binding upon the parties to it and must be performed by them in good faith”. 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 “enhanced transparency framework for action and support with built-in flexibility which takes into account Parties’ different capacities”. 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 “regularly”. 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 ‘best endeavour” 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 “non-punitive” means it is not envisaged to be an enforcement mechanism which actually has “teeth” and would probably be little more than a “name and shame” 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 “1.5 degrees Celsius” 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.