During the future scenario thinking segment of the 51st annual general meeting of worldsteel (World Steel Association) held in Brussels on October 16-17, Prof. James Bacchus, professor of global affairs and director of the Center for Economic and Environmental Opportunity at the University of Central Florida, as well as former chairman of the Appellate Body of the World Trade Organization (WTO), began his presentation by stating that he was an early advocate for the need to address climate change, while he has also familiarity with trade issues due to his experience as a judge with the WTO. Accordingly, this puts him in a position to see the issue of climate change versus trade from both sides. At present, he stated, climate change and trade are separate worlds. We are approaching a collision legally and the consequences worldwide will be significant. Why is this? In answer, he pointed to the fact that the Paris agreement on climate change does not have a dispute mechanism, nor does it express what shape its response might take on any issue. In addition, most countries which have signed the Paris agreement are also members of the WTO. As a result, he said, the following situation will eventually arise. Under the Paris agreement, a country will take action which falls within the scope of the WTO. Another affected country will then apply to the WTO for redress. So then the question arises under international law, who will judge? The answer here, he stated, is the Appellate Body of the WTO which will have the task of drawing the right line between trade and climate change.
Steel could be one of the first commodities to be involved in such a case, Prof. Bacchus said, and so his recommendation to the steel industry is to get to work now for some kind of regulation that would take account of the steel industry being in transition under special circumstances. Regarding some possible approaches, he said work could be done towards achieving changes in the subsidy rules of the WTO to take account of the special place of the steel industry. Also, the industry could seek to help shape competition policy at the WTO going forward, while the issue of export credits could also be looked at. In response to a question regarding the process by which the steel industry could approach the WTO, Prof. Bacchus pointed out that the WTO is made up of its members and so the members themselves are to be approached, and in this way the steel industry will be able to put forward its case and build up a sufficient coalition of support. He stressed that agreement need not begin with agreement by all WTO members, but by a base of members among which support has been built up.
Prof. Bacchus reserved harsh words for the current trade policy of the US, stating that he himself cannot explain it and that those responsible for it cannot explain it either, while he remarked on the euphemism of “policy uncertainty in the US” being used by some of the attendees at the worldsteel meeting. Action on steel has been threatened, he said, but we don’t know what will happen. He went on the state that there is currently no rational or predictable leadership in the US on steel or trade. He said that this situation needs to be monitored as it could lead to WTO action or also to tit-for-tat reactions which could destroy security in the steel industry for everyone.