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Effective climate clubs require ambition, leverage and insulation: Theorizing issue linkage in climate change and trade

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Abstract

Many proposals advocate linking climate and trade policy to improve climate cooperation. Since climate mitigation is non-excludable, mitigation cannot be enforced through issue-specific reciprocity, but linking mitigation with trade penalties on non-participants could incorporate trade’s enforcement powers into a climate club. However, this perspective has overlooked the relationship between climate policy preferences and existing trade flows. Using a model of issue linkage in climate and trade motivated by findings from the domestic political economy of international trade, I show that the necessary conditions for climate clubs are exacting. Effective climate–trade clubs require members with high levels of climate policy ambition, export leverage over laggards, and insulation from trade retaliation. However, I show that these three attributes do not necessarily co-occur theoretically or empirically. States that support the club’s goals on one dimension may undermine them on another. The findings provide insights into institutional design, climate politics, and the constraints on issue linkage in international cooperation.

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Data availability statement

The datasets analyzed in this paper can be accessed as follows: (1) Data on bilateral trade flows are collected by UN Comtrade (United Nations, 2022); (2) data on greenhouse gas emissions are collected from the World Bank’s World Development Indicators (World Bank, 2022). Full replication files are available on Harvard Dataverse at https://doi.org/10.7910./DVN/PKHAXG

Notes

  1. For broad overviews, see Falkner (2016); Hovi et al. (2016).

  2. I set the number of states \(I = 150\). This is a model assumption and reflects roughly the number of states in UN climate negotiations. The number of states in the model impacts the results because preferences are drawn from a distribution, large samples will tend to draw more extreme preferences, and the most extreme preferences on trade constrain the club’s design.

  3. I discuss the implications of this assumption at the end of this section.

  4. Appendix materials are available at the journal’s website.

  5. Increasing \(\beta \) will lead the core club members with relatively low climate preferences and relatively high trade exposure to leave the club; decreasing \(\beta \) will lead some additional states to join the club when their climate preferences are near the club’s standard and they trade less with the club than similarly placed peers.

  6. These countries are listed in the supplementary information.

  7. In extensions, I selected climate laggards using external rankings of climate policy and the results are similar.

  8. Note that Canada, China, Germany, Japan, South Korea, and United States are among the biggest emitters and the states with the highest export leverage over other large emitters. I exclude them from core membership of the leverage club.

  9. An alternative measure of leverage could re-weight export exposure by exports as a share of GDP. This would reflect that exports are more significant to some economies. Overall, the correlation between export exposure and exports as a share of GDP is 0.04 for non-club members, so should not affect the results systematically.

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Acknowledgements

I would like to thank Christina Davis, Jessica Green, Yoram Haftel, Thomas Hale, Jon Hovi, Michael Lipson, Jean-Frédéric Morin, Charles Roger, and Alexandra Zeitz, as well as participants at Harvard University’s Climate Pipeline Project Workshop, McGill University’s Centre for International Peace and Security Studies, and the 2022 annual meetings of the International Studies Association and the Political Economy of International Organization for helpful comments on earlier drafts.

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  1. Department of Political Science, Concordia University, Montreal, QC, Canada

    Sam S. Rowan

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Rowan, S.S. Effective climate clubs require ambition, leverage and insulation: Theorizing issue linkage in climate change and trade. Rev Int Organ (2024). https://doi.org/10.1007/s11558-024-09535-6

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