The current debate on climate change and its linkages to trade is rapidly gaining global attention. Thus it is reasonable to expect that the focus on carbon leakage and border tax adjustment will only intensify in the future. Carbon leakage is said to happen when production of carbon intensive products migrates from countries which have measures to reduce emissions to countries where there are no such measures. Therefore, border tax adjustment is suggested when carbon intensive products are imported from countries with no carbon emission regulation so that carbon leakage can be controlled.

Services account for the bulk of all economic activity in advanced economies, and their contribution in developing countries is increasing. Asia-Pacific economies are no exception. Services value added represents up to 90 per cent of all economic activity in Hong Kong, China, over three-quarters in the United States, and over two-thirds in Australia, Japan, New Zealand, and Singapore. Even in developing economies such as Viet Nam and the Philippines, services account for over one-third and one-half respectively of total value added in the economy.

The Asian and Pacific region has led the twenty-first century surge in economic growth that is powering the global economy while lifting millions of people out of extreme poverty. The economic momentum has primarily been driven by ever-increasing exports and has thus led to a sharp expansion of (fossil fuel-intensive) production and cargo transportation.

The purpose of constructing ‘Emissions Intensity Indices’ (EIIs) for trade (import and export) is to identify how much trade contributes to emissions. Let M isr be the import of commodity i from source s to destination r . Let EP is and EP ir be the e missions per unit of production of this commodity in regions s and r respectively, and let ET isr be the emissions associated with the transport of this commodity from region s to region r .

A few years ago, the relations between the climate and trade communities were marked by mutual ignorance at best, and more often by deep hostility. The climate community did not want to be hindered by trade constraints. The trade community was so afraid of the damage that climate policies could do to the multilateral trade regime that it was adamantly opposed to any consideration of such concerns. Mutual destruction looked inevitable. Now things are changing. The trade community is realizing that climate change concerns will be high on the political agenda for a long time to come.

Amongst the several alarms triggered by the global economic crisis, the one alerting to a possible global return to protectionism sounded particularly loudly. As the crisis spread geographically and affected more economic sectors, fears that domestic pressures for protectionism would not be resisted gained intensity. There have been a number of indications that trade protectionism has indeed increased during the course of the now-receding crisis. Available empirical evidence focuses largely on the impact of the crisis on merchandise trade, and, to some degree, on foreign investment.

The Group of Twenty Finance Ministers and Central Bank Governors from the world’s 20 largest economies, known as the G-20, represents a remarkable experiment in global economic governance, opening up international decision- making processes to a broader range of countries. The ultimate purpose of this policy brief is to describe a possible trade policy agenda for the G-20 in 2010. However, before doing so it will be helpful to describe the G-20’s approach to trade policy cooperation and its record in 2009.

One of the noteworthy dimensions of India’s increasing integration with the world economy has been the increase in both gross Foreign Direct Investment (FDI) inflows to and outflows from the country over the last decade. The simultaneous spurt in both FDI inflows and outflows has meant that FDI has not been a significant source of balance of payments financing on a net basis at least until 2006. The rise of India as both a source and host of FDI has begun to generate a sizeable literature on the determinants and characteristics of such flows at an aggregate level.

Despite the notable improvements in the economic climates and growth prospects of many developing economies in Asia, poverty remains a complex and persistent issue confronting policymakers even today. Poverty estimates published by the World Bank in 2008 reveal that nearly 1.4 billion people in the developing world were living on less than US$ 1.25 a day in 2005.

Scientific studies make it cl ear that climate change is already happening, with greenhouse gas emissions induced by human activities as a significant driver of this change. Prior to industrialisation, the CO2 concentration in the atmosphere was about 280 parts per million (ppm). But by 2007, it has increased to about 382 ppm mainly due to combustion of fossil fuels and significant deforestation in different parts of the world. Methane (CH4) and nitrous oxide (N2O) are the two other major greenhouse gases. The major sources of emission are energy supply and industry.