The Kyoto Protocol
Today, countries’ policymakers are starting to respond sincerely on the environmental changes happening. They are proposing policies that aim to reduce greenhouse gas emissions and help society adapt to the impending impacts triggered by past emissions. As science continues to bring clarity to present and future global climate change, leaders of different countries are trying to make a global response wherein every country will have to participate.
The range of climatic changes will have real effects on the natural environment plus to human-made infrastructure and their ability to contribute to economic activity and quality of life. The effects of these are varied across regions, countries, and sectors of economy, leaving future governments, citizens, and the private sector to face the full spectrum of direct and indirect costs accrued from increasing environmental damage and disruption.
The indirect effects of climate change have not been clearly quantified, but considered to be substantial. Higher prices for products are due to the prices of raw materials, transport, taxes, energy, and insurance increase. These are few of many forms of the effects brought about by climate change.
Since scientific evidence is foreseeing that climate change will directly or indirectly affect all economic sectors and regions of the country. This means, the need of a “national policy for immediate action to mitigate emissions coupled with efforts to adapt to unavoidable impact will significantly reduce the overall costs of continued climate change” (Ruth, Coelho, Karetnikov, 2007). Moreover, there are global or international policies in which being designed to lessen the greenhouse gas emissions that caused climate change.
International Trade: Kyoto Protocol
One of the global program policies which is pursued to be a standard policy of the industrialized countries to curb greenhouse emissions is the Kyoto Protocol.
Undoubtedly, Kyoto Protocol is a significant step for the reduction of greenhouse gases emission, yet developing countries are spared to the responsibility for emission reduction due to its considerable effect in their economy. As Ishikawa and Kiyono (2000) pointed out that “with only partial participation by countries to the framework of greenhouse gas emission falls in Annex I countries, it may rises in the other countries. As a result, the worldwide level may rise. Moreover, the partial participation may affect international trade in goods and foreign direct investment”.
In doing an analysis on the effect of global warming to the international trade in line with the regulation and policy of Kyoto Protocol, the need to examine emission quota, emission tax, and emission standard are important. What is most significant in dealing with the effects of GHG emission issue is the countries’ choice of environmental regulatory policies that affects either the world abatement performance or a country’s trade structure. In Ishikawa and Kiyono analysis, a country’s strategic choice of emission controls greatly affects not only the volume of the world total greenhouse gas emission volume affect but also each country’s welfare.
In the international trade, if international commodity trade is free, then a country’s choice of emission controls over emission quotas, emission taxes and emission standards critically affects stability of the resulting trade and production structure. Following this line of thought, in using the tariff-quota equivalence theorem in international trade, Ishikawa and Kiyono found two important results. First, when a government tries to replicate the production equilibrium in free trade under the emission quota with the equivalent emission taxes, then the equilibrium becomes unstable. Second, when a government enforces the equivalent emission standards achieving the emission per unit of output at the emission-quota equilibrium, then only completely specialization in the emission-extensive industry is possible at the resulting equilibrium insofar as the emission intensities differ between the industries and there are no emission intensity reversals.
In Kyoto mechanism what is important in its emission scheme is the promotion of free international emissions trading. This means there is a force of trying to replace the role of the emission tax with the emission permit price in the world emissions trading market. This still holds the implied idea that creation of international emissions trading market may make the world trade and industrial structure very volatile against change in the world economic environment. In allowing the international emissions trading as a scheme, the assigned units of emissions moves around the world and affects the production structure of each country participating in the Kyoto mechanism.
Globalization, Global Warming and Southeast Asia
In the current environmental status of the world, various studies concurred that there are various factors involved that affects the environment. Some of those factors which primarily affect the environment and international trade are globalization and global warming. It has been argued by scholars that the cause of rapid changes in the environment is globalization. The rise of new infrastructures, together with, the deluge of millions of industries all over the world, ranging from oil and gas, technology, electricity, and other industries are in great magnitude of causing climate change. The combustion of fossil fuels and other gases from energy industries affect much in the amount of GHG emissions that cause climate change.
Since the issue of climate change is global, the response must also be global. The participation of all countries like the industrialized and developing ones is needed. Yet, in Kyoto Protocol, developing countries are exempted while the industrialized and rich countries should participate. Nevertheless, even though, developing countries like in Southeast Asia are not obliged to be active participants in Kyoto mechanism, it has still an impact to the international trade operations and the continuing process of globalization.
One of the most significant features of the effects of global warming to international trade in Southeast Asia if considered to be members of the Kyoto mechanism is the importation and exportation of good, services, and products. Considerably, the countries like Japan, China, Korea, India and others which considered industrialized can affect the exchange or trading of good and products which have something to do with the environment concerns. In this sense, the minimization of products for exportation and importation of one region to another can have an adverse affect to the economy. However, not all countries of Southeast Asia are members of the Kyoto mechanism; some like developing countries may not be affected. However, if a developing countries belong to a specific region of trading and one of the countries in a region is implementing the Kyoto mechanism, it might have affect the trading of products and in turn will lessen their economic income.
On the other hand, the effects of globalization in relation to global warming are significant. The globalization brought a great impact on the changes happening within the environmental spectrum. The Southeast Asia is still undergoing and now developing, trying to meet the standards of the global networks of regions and countries. The economy is the most fragile entity to which globalization can influence and at the same time an agent for development and globalization of a region or country. The globalization of Southeast Asia contributes also to the increasing problem on global warming. Most of the countries in this region are getting more technological and industrial which are substantially produce emissions of greenhouse gases that affect the environment.
Hence, the international trade and globalization can have a tremendous or light impact to Southeast Asian countries depending whether they are involved to certain policies or are exempted from it. But what is most important is that each should take initiative to counter-attack the adverse effect of global warming.
Ruth, M., Coelho, D., & Karetnikov, D. (2007). The US Economic Impacts of Climate Change and the Costs of Inaction. A Review and Assessment by the Center for Integrative Environmental Research. University of Maryland
Ishikawa, J. & Kiyono, K. (2000). International Trade and Global Warming. Tokyo, Japan