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International Journal of Management Sciences and Business Research, July-2020 ISSN (2226-8235) Vol-9, Issue 7
http://www.ijmsbr.com Page 89
Striking the Delicate Balance between International Trade and Environmental Protection:
Implications for Climate Change in Oman
Author Details:
(1)Dr. Sufian Eltayeb Mohamed Abdel-Gadir, Assistant Professor in Economics and Head, Quality Assurance
& Academic Accreditation Unit, College of Law, Department of Public Law, Room 0038, Block G, Sultan
Qaboos University, P.O. Box 50, Al-khod P.C. 123, Muscat, Sultanate of Oman (2)Dr. Ngozi Finette Stewart-
Environmental Policy Research Fellow, United Nations University, Institute for Natural Resources in Africa
(UNU-INRA), University of Ghana Campus, Accra-Ghana, Cell:+233-24 5195268; Office: +233-302-213850.
Ext 6322, Email: n.stewart@unu.edu;
Abstract
International trade law and international environmental law have experienced a different evolution,
characterized by the precedence of the international economic order on the development of environmental
law.In this paper, relations between international trade and environment have been discussed within its
implications at national and internal levels. It was shown that the absence of a firm balance between the two
has affected climate change.
For country as Oman who depends mainly on oil and gas sector, the issue of reducing CO2 emission need
formulation of strict environmental and energy policies. The government can adopt and encourage the use of
renewable energy as best alternatives for oil and gaz.
Keywords: Oman. Climate Change; Environment, International Trade
JEL Classification: 010; C22; C32; C34; Q43; Q56
1. Introduction
International trade law and international environmental law have experienced a
Different evolution, characterized by the precedence of the international economic order on the development of
environmental law.
Nowadays, the process of globalization raises ethical, philosophical and political questions on both the
development and the evolution of our society vis-à-vis the preeminence of economic logic. Analyzing the
highly complicated question of relations between trade and environment is, thus, as indispensable as it is
incredibly difficult.
In this paper, relations between international trade law and international environmental law, two branches that
have developed independently within the international legal system, will be explored with particular reference
to how the absence of a firm balance between the two has affected climate change.
Climate change is one of the greatest challenges facing the international community. Mitigating global warming
and adapting to its consequences will require major economic investment and, above all, unequivocal
determination on the part of all policy-makers.
2. The Interrelationship between International Trade and Environmental Protection
Global awareness of international trade and environmental concerns were beginning interested at the United
Nations Stockholm Conference on Development in 1972 and has been a key aspect of the Brundtland Report
1
.
This report was published in1987 by the World Commission on Environment and Development (WCED). At
the Stockholm Conference, development was linked to the exploitation of natural resources; in the Brundtland
Report interdependence appeared as a central element, recognizing the existing interconnection between
political spheres that by then were governed by different rules and institutions (such as industry, species and
genetic resources protection, energy, etc.).
1
The Brundtland Report introduced the concept of sustainable development and described how it could be achieved sponsored by the
united nations (UN) and chaired by Norwegian Prime Minister Cro Harlem Brundtland.
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In the scope of the Rio Conference, the right to development was related to the
Imperatives of environmental protection. The 1992 World Conference on Environment and Development
provided a generally accepted definition of the concept of sustainable development, elaborating different
concepts and approaches of development that takes into account its economic, environmental and social aspects.
Despite the lack of a generally accepted definition in a binding agreement, the Conference clearly established
the links between economic development, mainly composed by trade, and environmental rules in the scope of
social conditions.
The right to development must be fulfilled so as to equitably meet developmental and environmental needs of
present and future generations. (Principle 3, Rio Declaration, 1992) In order to achieve sustainable
development, environmental protection shall constitute an integral part of the development process and cannot
be considered in isolation from it. (Principle 4, Rio Declaration, 1992)
In Agenda 21, the responsibility of states in the implementation of a development policy was detailed as
follows:
Governments recognize that there is a new global effort to relate the elements of the international economic
system and mankind’s need for a safe and stable natural environment. Therefore, it is the intent of Governments
that consensus-building at the intersection of the environmental and trade and development areas will be
ongoing in existing international forums, as well as in the domestic policy of each country. (Agenda 21, Chapter
2)
Seen from the perspective of free trade, the relation between trade and environment presents itself as follows:
• Trade sets the conditions for economic growth that are necessary to improve human well-being and, therefore,
well-being of the environment;
• Trade may be used to improve conditions for environmental protection by allowing the exchange of
knowledge and environmental-friendly production techniques or by fostering the use of less polluting means of
production;
• Trade may avoid waste by enabling the distribution of production.
The environmental perspective of the relations existing between trade and environment may vary depending on
the preferred theoretical approach and the level of radicalism of the pursued goals. The trading system is
generally considered to be a threat to the environmental equilibrium, since: this general approach is not enough
to solve frequent conflicts between these two normative branches and, above all, to analyze in depth the
contradictions between the international trading system on the one hand and the establishment of a development
model favoring the environment on the other. Thus, the opposing sides of both normative branches confront the
international legal order.
The main problem is to evaluate the effects derived from the interrelationship existing between trade and
environment
2
. In order to better command the relation between these two fields, some organizations such as the
WTO or OECD have created working groups to develop methods to evaluate the impact of liberalization of
trade on the environment and vice versa (i.e. methods likely to measure the effects of liberalization of trade on
the environment). Such initiatives, still very recent, do not provide precise and exhaustive results on every
sector of activity. For example, analyses are ongoing on agriculture and the impact of fisheries and forestry
measures within the OECD Joint Working Party on Trade and Environment.
Confronted by the reality of trade liberalization, international environmental law has adopted trade measures
aiming to solve different environmental problems at the national and international levels.
The term trade measures usually refers to any instrument imposing restraints, conditions or restrictions to both
imported or exported products and services, or to the process of their import or export . Trade measures may,
2
In the policy arena, the importance of establishing coherent relationships between the trade obligations set out in various bilateral
and multilateral trade agreements and environmental policies of countries is now well recognized. Environmental provisions in the
General Agreement on Tariffs and Trade (GATT) allow adoption of product-related measures in certain situations if they are
“necessary to protect human, animal or plant life or health, “or “relat[e] to the conservation of exhaustible natural resources.” In
addition, other trade agreements—such as NAFTA and the U.S.-Singapore free trade agreement—include provisions that directly
address environmental concerns.
International Journal of Management Sciences and Business Research, July-2020 ISSN (2226-8235) Vol-9, Issue 7
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thus, take a variety of forms from the perspective of establishing an environmental policy: trade bans, product
standards, notification procedures, etc. Furthermore, the role of trade measures in different conventions may
vary greatly depending on the goals of the conventions and the expected impact of trade relations on the
conventions’ environmental objectives. It is estimated that there are more than 300 MEAs
3
addressing very
different environmental problems.
Some of them deal with very specific issues and others concern economic activities. The following categories
may be identified in general:
• Agreements aiming to control and monitor trade activities, considering that they contribute to overexploitation
of natural resources (animal and plant species, mineral resources, etc.);
• Agreements aiming to combat trade activities seen as sources of pollution (waste, air pollution, etc.).
The Convention on Nature Protection and Wild Life Preservation in the Western
Hemisphere, adopted in Washington, DC, on 12 October 1940, established a control system by issuing
certificates authorizing the export, transit and import of certain protected fauna and flora (Article IX).
The African Convention on the Conservation of Nature and Natural Resources, adopted in Algiers on 15
September 1968, set measures to rule traffic (transport, trade, exports, etc.) in specimens and trophies through
an authorization system for export and import (Article IX). Different annexes permit the establishment of
regimes authorizing takings (more strict for species from list A than those from list B, Article VIII.1 do).
This section has shown the ambiguous approach towards the confrontation between the two legal systems that
link trade and environment, with no concrete solution being offered to solve the (obvious) difficulties resulting
from their coexistence as evidenced in the seeming oblivion to the increasing effects of Climate Change. The
next section will examine the global effort to address the impact of trade liberalization on Climate Change and
the success or otherwise of the effort.
3. The Impact of Trade on Climate Change
There has been a rapid expansion of international trade and deepened trade liberalization among countries
within the last few decades. The volume of world trade is nearly 32 times greater than the 1950 level. The ratio
of merchandise trade to gross domestic product (GDP) has increased from less than 20 percent to more than 50
percent in less than half a century. This was partly facilitated by reductions in average world tariffs at major
export destinations; that is, tariffs were reduced from 18 percent in Europe and 15 percent in North America in
the late 1950s to about 4 percent in North Atlantic countries by the end of the 20th century (Baldwin 2006). In
parallel, there has been a drastic increase in the carbon dioxide (CO2) concentrations in the atmosphere, from
about 310 ppm (parts per million) in the 1950s to about 390 ppm by the end of the century (World Bank 2010).
The simultaneous expansion of trade, greater trade liberalization and higher pollution intensities, therefore, raise
questions about the climate impacts of trade and trade liberalization.
Climate change is in turn having a significant impact on ecosystems, economies and communities. Rising
average temperatures do not simply mean balmier winters. Some regions will experience more extreme heat
while others may cool slightly. Flooding, drought and intense summer heat could result. Violent storms and
other extreme weather events could also result from the increased energy stored in our warming atmosphere.
One of the most serious impacts of climate change is how it will affect water resources around the world. Water
is intimately tied to other resource and social issues such as food supply, health, industry, transportation and
ecosystem integrity. Climate change also threatens the health of our children and grandchildren through
increased disease, freshwater shortages, worsened smog and more. These impacts also pose incalculable
economic risks that far outweigh the economic risks of taking action today.
3
Multilateral environmental agreements (MEAs), MEAs are agreements between States which establish principles, rights and
obligations undertaking by parties to respect the environmental purposes. Currently are operating over 300 MEAs, whose content aims
to regulate and prevent the environmental challenges through a variety of specific tools (legal, economic, technical, and commercial,
etc.).About 30 of these are focused on the use of environmental trade measures.
International Journal of Management Sciences and Business Research, July-2020 ISSN (2226-8235) Vol-9, Issue 7
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The world's leading scientists report that to prevent dangerous levels of global warming governments should act
to limit global warming to less than 2ºC by taking concerted action to reduce greenhouse gas emissions. This
objective appeared to have been taken seriously at the 21st Conference of the Parties to the Kyoto Protocol in
France from ….the success of that COP is the core discussion of this paper. Does the outcome of the COP
amount to putting old wine into new wine skin? Or is it, for once, a manifestation of unfeigned commitment to
the protection of the environment for present and future generations? As a background to the above analysis, the
next section will examine the interaction between international trade and environmental in the Context of
Climate Change in Oman.
4. International Trade-Environment Nexus in the Context of Climate
4.1.Greenhouse Gas Emissions in Oman
In case of Oman, as oil and natural gas sectors dominates the economy in terms of their big share in GDP
and government revenues, they considered to be the primary cause of greenhouse gas (GHG) emissions within
the country. So Oman is used to be vulnerable to impacts of increased average temperatures, less and more
erratic precipitation, sea level rise (SLR) and desertification. According to study of WRI (2005) the most
contributing factor to CO2 in Oman, comes from gaseous fuels followed by liquid fuels, (see figure 1,
below).
Figure 1: C02 emissions from gaseous fuel consumption (kt)
Source: World Bank, World Development Indicators, 2017
Another important factor for generating CO2 emissions comes from electricity and heat production. Electricity
in Oman is generated from two sources, natural gas (97.5) and oil (2.5), figure 2. Looking at the Sources of
CO2 emissions which comes from energy sub-sectors in Oman (expressed as a percentage of the total Fuel
combustion), electricity ranked number one followed by manufactured sector and transportation sector
(figure 3)
Figure 2: Electricity production as a percentage of fuel type in Oman, 1991–2014.
y = 2656.9x + 5084.1
R² = 0.955
0
20000
40000
60000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CO2 emissions from gaseous fuel consumption (kt)
2 per. Mov. Avg. (CO2 emissions from gaseous fuel consumption (kt))
Linear (CO2 emissions from gaseous fuel consumption (kt))
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Source: World Bank, World Development Indicators, 2017
Figure 3: Sources of CO2 emissions from energy sub-sectors in Oman (expressed as a percentage of the total
Fuel combustion)
Source: World Bank, World Development Indicators, 2017
4.2.Trade effects of Climate Change: Graphical Inspection
Taking into account indirect emissions via inter-industry linkages, international trade make up roughly 23% of
production-based emissions in recent years (Davis and Caldeira 2010)
4
.
Figure 4 below shows the relationship between trade at aggregate level and CO2 emission (metric tons per
capita). As trade fluctuates over the years 1992 -2013, the effect on CO2 emission is kept increasing over the
same period.
Figure 4: Trade (% of GDP) vs. CO2 emission (metric tons per capita)
Source: World Bank, World Development Indicators, 2017
4
Davis and Caldeira 2010, Consumption-Based Accounting of CO2 Emissions, Proceedings of the National Academy of Sciences ·
March 2010
0
20
40
60
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CO2 emissions from transport (% of total fuel combustion)
CO2 emissions from manufacturing industries and construction (% of total fuel combustion)
CO2 emissions from electricity and heat production, total (% of total fuel combustion)
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Figures 5 and 6 depict the relationship between CO2 emission (metric tons per capita) and fuel exports as % of
merchandized exports and GDP per capita growth (annual%) consecutively for the period 1991-2013. As
shown in the graphs the CO2 emission (metric tons per capita) is increasing with increasing both the fuel
exports as % of merchandized exports and GDP per capita growth (annual %)
Figure 5: The relationship between CO2 emission (metric tons per capita) and fuel exports as % of
merchandized exports, 1992-2013
Source: World Bank, World Development Indicators, 2017
Figure 6: The relationship between CO2 emission (metric tons per capita) and GDP per capita growth (annual
%), 1991-2013
Source: World Bank, World Development Indicators, 2017
5. The Common Response to the Impact of Trade on Global Warming
As global warming keeps calling for a common response from the international society, the Objective is also to
gather a maximum number of states in one common agreement. Thus, the 1992 United Nations Framework
Convention on Climate Change (UNFCCC) aims to stabilize “greenhouse gas concentrations in the atmosphere
at a level that would prevent dangerous anthropogenic interference with the climate system” (Article 2). It
establishes common but differentiated responsibilities through the division of states into three groups with
specific duties (Article 4), taking into account national, regional development priorities, and the importance of
maintaining sustainable economic growth.
The Kyoto Protocol is based upon market strategies and above all on trade logic
to achieve its goals. Article 4 provides for the globalization of emissions quotas within the countries’ group by
joint fulfilment of their respective commitments. The classification of states into categories makes it more
flexible and easier for economic agents to achieve the set objectives in the least expensive way. However,
depending on the attribution of the set objectives, a surplus of emission rights can appear on the market, which
may lead to increased emissions from the group of industrialized countries. The Kyoto Protocol establishes
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emission trade between Annex I countries. This has, however, been highly criticized as “commercializing the
atmosphere”.
Moreover, the Conference of the Parties to the UNFCCC decided to establish a Pilot phase allowing developed
and developing countries to conclude agreements, aiming for the fulfilment of obligations related to the
reduction of greenhouse gas emissions, by participating in investment projects. States and the private sector
may be able to invest in countries in transition or in developing countries and obtain emission credits in
exchange.
These emission reduction units “shall be added to the assigned amount for the transferring Party” (Articles 3.10
and 3.12).
Other techniques advocated in the Kyoto Protocol include:
• Tax impositions on carbon dioxide emissions;
• Adoption of certain treatment or emission rules, notably for greenhouse gas emissions not regulated by the
Montreal Protocol;
• Elimination of subsidies and any fiscal incentive practices running counter to the objective of the Framework
Convention.
The Kyoto Protocol provides for the application of trade liberalization measures to enable a state to comply
with its commitments:
Progressive reduction or phasing out of market imperfections, fiscal incentives, tax and duty exemptions and
subsidies in all greenhouse gas emitting sectors that run counter to the objective of the Convention and
application of market instruments. (Article 2.1(a)(v), Kyoto Protocol, 1997)
The Kyoto Protocol establishes a direct link between the implementation of measures on emissions reduction
and their consequences on international trade, respecting the very general principle of compatibility between the
systems of rules stated in the UNFCCC. No system is intended to prevail over the other, the tendency being
more towards conciliation in case of conflict. Furthermore, it states that the countries in Annex I shall limit the
impact of their policies and measures on international trade:
The Parties included in Annex I shall strive to implement policies and measures under this Article in such a way
as to minimize adverse effects, including the adverse effects of climate change, effects on international trade,
and social, environmental and economic impacts on other Parties, especially developing country
Parties.(Article 2.3, Kyoto Protocol, 1997)
The Kyoto Protocol does not only respect the principle of free trade but can be characterized by giving
particular significance to the private sector regarding the implementation of the envisaged market strategies.
However, their intervention may lead to problems regarding monopolies or abuse of dominant positions (for
instance, if subsidiary companies under the same holding company are the only beneficiaries of subsidies and
technology transfers). Issues of civil or criminal liability may also arise regarding the economic agents involved
in the implementation of provisions for the reduction of greenhouse gas emissions.
This market-based pattern has been applied in all the Conferences of the Parties to the Kyoto Protocol; and so
far, only negligible steps have been made to mitigate Climate Change as a result. Even regional attempts have
not proven to be helpful in curbing the menace. For example, in addition to European Council’s Six Action
Programs, the region has also introduced the Principle of Integration where the 1992 Maastricht Treaty
enshrined the principle of integrating the environment into other Community policies in Article 130 R 2,
represented in a title devoted to the environment. It simply states, “Environmental protection requirements must
be integrated into the definition and implementation of other Community policies”.
Subsequently, the Amsterdam Treaty (See Articles 2, 3 & 6), which entered into force on 1 May 1999, made a
significant contribution by referring to sustainable development, a concept developed by the 1987 Brundtland
Report. The European institutions took this new goal into account when developing a European strategy in
favor of sustainable development, consecrated by the European Council held in Gothenburg in June 2001.
In the same way, through NAFTA, North America developed a regional integration and cooperation in the areas
of economy, environment and manpower, while Mercosur, aiming at the creation of a common market,
International Journal of Management Sciences and Business Research, July-2020 ISSN (2226-8235) Vol-9, Issue 7
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established rules and developed structures to approach environmental problems related to freedom to trade and
free competition. NAFTA aims at governing the economic and trade activities of the three
signatory states, by introducing rules on the reduction and elimination of custom duties, international
investment, sanitary and phytosanitary norms, intellectual property, the energy, petrochemical and agriculture
sectors (Chapter 7B)
6. National Climate Change Response: Oman’s Climate Change Initiatives
Oman is taking serious steps to reduce its greenhouse gas emissions and global warming. The Sultanate signed
the United Nations Framework Convention on Climate Change (UNFCCC) at the first Earth Summit in Brazil
Conference in 1992, and then ratified it by the Royal Decree No. 119/94, December 7, 1994. Oman also ratified
the Kyoto Protocol to the Framework Convention on Climate Change by the Royal Decree No. 107/2004,
October 10, 2004. Not only that, but also established the Ministry of Environment and Climate Affairs in 2007
by the Royal Decree No. 90/2007
5
. The Ministry of Environment and Climate Affairs ( MECA) established the
Directorate-General for Climate Affairs, which is responsible to assess vulnerability and the risks posed by
climate change and focus and intensify work in the areas of adaptation and mitigation of climate change at the
national and international levels
6
.
Oman has committed to curb its expected Green House Gas (GHG) emissions growth by two per cent in a
document sent by the Ministry of Environment and Climate Affairs to the UNFCCC (United Nations
Framework Convention on Climate Change) before the landmark climate accord in Paris.
7. Taking a Bold Step: a Proposal
A number of WTO rules deal with many of the economic and regulatory instruments used by countries to
mitigate climate change. However, the relevance of WTO rules to climate change mitigation policies, as well as
the implications for trade and the environmental effectiveness of these measures will very much depend on how
these policies are designed and the specific conditions for implementing them.
The debate on trade and climate change is taking place against the backdrop of vital multilateral climate change
negotiations, which are due to come to a conclusion at the 21st Conference of the Parties to the United Nations
Conference on Climate Change (UNFCCC) in December 2015 in France.
Not fixing environmental standards that are restrictive to trade is a trap in itself and will render all the above
environmental protection efforts wasted. At the same time, it makes sense not to totally sacrifice development
on the altar of environmental protection. Consequently, it becomes imperative to tamper the two extremes to
create a delicate balance (compromise).
What is needed to immediately mitigate the effects of Climate Change on the global environment is not a
market based approach but an earth-based approach. If such an approach must be reflected in the Kyoto
Protocol, it must be one that gets everyone in good faith to be able to implement binding provisions. Provisions
that will review the commitments every five years, if the emission levels must reduce below 2 degrees.
Let it be emphasized also, that climate change is not just about increase in temperature; or how much developed
countries are willing to support developing countries; or what part of the agreements should be binding or not.
5
https://meca.gov.om/en/module.php?module=pages-showpage&CatID=21&ID=40 accessed 18/08/2018
6
Ministry of Environment and Climate Affairs (MECA) has established a number of monitoring systems in order to monitor and
control the behavior of the environment, especially in the industrial zones. The mobile stations are located in the Sohar Industrial
region (Sohar Port) and the other one in the commercial zone in Muscat (Ruwi). In addition, the Ministry installed three fixed
environment monitoring stations in Al Rusail Industrial State, Sohar Industrial State, and Al Fahal Port. This framework can help, for
example, to locate the controlling industrial air pollution sources, to estimate the contributions from each pollution source to pollutant
concentrations at specific locations, to characterize, understand and predict quantitatively the pathways of industrial air pollutant
transport.
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Arguably, these are secondary concerns bordering on the ephemeral. The focus in the battle to combat climate
change should begin from values – utilitarian (consumption) values do not show any meaningful commitment to
saving the earth. If all that trade policies reflect are for the benefit of man in this generation, then the current
attempts to curb global warming are feigned ones. A value of stewardship, of consciousness of the need for
environmental preservation should be reflected in clauses that promote maintenance – clauses that acknowledge
the that an absolute protection of the environment is not possible; but at the same time reckon and are
committed to ensuring that material progress (trade) id adapted to the earth’s carrying capacity.
8. Conclusion and Policy Recommendations
The analysis of climate change impacts on Oman in the context of international trade confirms the importance
of understanding the unique interplay between the Omani economies and climate change in order to inform a
formulation of national climate action plans.
In this paper, relations between international trade and environment have been discussed within its implications
at national and internal levels. It was shown that the absence of a firm balance between the two has affected
climate change.
Climate change and environmental sustainability is the big issue and challenges facing all countries nowadays.
Mitigating global warming require a attention and efforts to address climate change around the world.
For country as Oman who depends mainly on oil and gas sector, the issue of reducing CO2 emission need
formulation of strict environmental and energy policies. The government can adopt and encourage the use of
renewable energy as best alternatives for oil and gaz.
Acknowledgment
The work has been carried out as a research collaboration between Dr. Sufian Eltayb Mohamed an economist,
College of Law, Sultan Qaboos University, Oman and Dr. Ngozi Finette Stewart who specialized in
Environmental Law. Dr Nioozi is Environmental Policy Research Fellow, United Nations University, and
Institute for Natural Resources in Africa (UNU-INRA). The project done at individual level. We would like to
thanks all faculty members of the College of Law, Sultan Qaboos University for their useful comments and
suggestions during our presentation in our internal seminar, which greatly improved the final version of the
paper
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