This paper uses detailed data on bound and applied tariffs to assess the consequences of the WTO's December 2008 Modalities for tariffs levied and faced by developing countries, and the welfare implications of these reforms. We find that the tiered formula for agriculture would halve tariffs in industrial countries and lower them more modestly in developing countries. In non-agricultural market access (NAMA), the formulas would reduce the tariff peaks facing developing countries and cut average industrial country tariffs by more than a third. We use a political-economy framework to assess the implications of flexibilities for the size of the tariff cuts and find they are likely to substantially reduce the outcome. However, despite the flexibilities, there are likely to be worthwhile gains, with applied tariffs facing developing countries cut by about 20% in agriculture and 28% in NAMA, and sizeable cuts in tariffs facing industrial countries. The welfare impacts of reform are evaluated using a new approach to aggregation that improves on the traditional, flawed approach of weighted-average tariffs. This substantially increases the estimated benefits of an agreement along the lines of these modalities, with estimated global income gains of up to $160 billion per year from market access reform.

This paper examines the specific ways in which the provision of emissions permits by governments in carbon trading schemes, interacts with, and challenges, the disciplines on subsidies in the WTO Agreement on Subsidies and Countervailing Measures. It will argue that the case of emissions permits gives rise to two key challenges. First, it highlights the need for a resolution on the issue of the characterization of intangible goods under the SCM Agreement, and the importance this has for the calculation of benefit and hence the correct application of SCM disciplines. Secondly, when applied to emissions permits, the SCM Agreement produces a result that heavily favours the complaining Member at the expense of ‘distributive justice’. This is compounded by the current lack of directly applicable exceptions for subsidies directed at legitimate public policy goals. Fundamentally, this will affect the potential cost and continuing viability of national emissions trading schemes and further challenge the environmental credentials of the WTO.

There is no doubt that trade and climate policies can be mutually destructive. But there are three strong reasons to suggest that they can also be mutually supportive: they have a common problem, common foes, and common friends. Mutual support would be much stronger if the world regimes for these two policies shared a few common principles. The climate community should feel at ease with the broad WTO principles of ‘national treatment’ and ‘most-favoured nation’, and rely on them in building its own treaty and institutions. The trade community should grasp the opportunity to benefit from the better disciplines on adjustment policies that it is hoped the climate community will design.

These conclusions should put the many pending problems into a more positive perspective, and persuade negotiators to find pragmatic compromises, as was the case with the GATT. Using this perspective, the paper focuses on a few key issues, such as the definition of carbon border taxes and the reasons to ban carbon tariffs. Other cases of mutual support are examined. For instance, the climate community should not repeat the mistakes of the world trade regime in dealing with the developing and least developed countries.

After years of debate, the issues of whether and where (i.e. under which legal element) regulatory purposes should be considered under Article III:2 and Article III:4 of the GATT – the most invoked provisions of the National Treatment rule – remain unsolved. This article submits that the preparatory work of the National Treatment rule provides significant interpretative guidance on the issues. In relation to Article III:2, 2nd sentence and Article III:4, the WTO jurisprudence has achieved consistency with the interpretative guidance. However, by expanding the reach of Article III:2, 1st sentence to origin-neutral fiscal measures whereas rejecting the relevance of regulatory purposes to the determination of whether such measures are in violation of that sentence, the WTO judges have failed to respect the functions of Article III:1 and Article III:2, 1st sentence as contemplated by the draftsmen. To remedy this failure, this article proposes that the WTO adjudicators should either approve formal purpose inquiries under Article III:2, 1st sentence, or, alternatively, confine the application of that sentence to origin-specific measures only.

Although Asian regionalism has commanded much attention from academics and policymakers, it has largely been restricted to the trade and financial realms. This paper focuses specifically on the scope and limits of ‘investment regionalism’ involving Asia. A combination of regional foreign direct investment (FDI) stakes and international socialization patterns has led Asian actors to mark investments as a key issue in their regionalism strategy overall. As elsewhere, they too have moved toward a mode of governance favoring the formal legalization of investments in terms of the precision, obligation, and delegation of rules. Already the endeavors of both the middle and dominant economies in the region have shifted from just concluding Bilateral Investment Treaties (BITs) and investment-related chapters in Free Trade Agreements (FTAs) to designing region-wide investment agreements and initiatives by-and-for Asian countries. Although the legal effectiveness of this rule-making change will play out in the long run in and across Asian societies, the more immediate policy implication relates to its potential impact on the evolution of Asian regionalism as a whole.