WTO rules allow carbon tariffs

2009-06-26

in Economics, Law, Politics, The environment

Helpfully, the World Trade Organisation (WTO) has made it clear that members can use border tax adjustments to deal with other jurisdictions that lack carbon pricing. For instance, steelmakers that are subject to a domestic carbon tax or cap-and-trade scheme could have their profitability protected from steelmakers in unregulated jurisdictions, through the use of an import tax.

The standard WTO position on environmental rules is that they are fine if applied equally to both domestic and international firms. For instance, you can require that both domestic fishers and those trying to sell imported fish use nets that are designed not to catch sea turtles. What you cannot do is impose the restriction on foreign firms in other WTO countries, but not impose it on domestic firms. Of course, as with all international legal issues, the practicalities of implementation and enforcement are complex.

More discussion of the statement is on the Free Exchange blog.

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. June 30, 2009 at 1:45 pm

Related post:

Carbon tariffs
* January 21st, 2008

. July 27, 2009 at 10:48 am

Carbon Tariff Provisions Stoke Debate in the U.S. and Europe
Monday, July 27, 2009
By Patrick Goodenough, International Editor

(CNSNews.com) – The same “carbon tariff” provision in U.S. cap-and-trade legislation that has alarmed American business groups made waves over the weekend in the European Union, where several governments fretted that the proposal could undermine the drive to achieve a new global climate change agreement by year’s end.

India and China, the U.S. trade partners most likely to be affected by the envisaged punitive measures, are protesting strongly, and the U.S. Chamber of Commerce has joined three other business organizations warning the Senate that the tariff provision “could trigger a green trade war.”

Govt ‘sceptical’ over carbon import tariffs

Sat Jul 25, 7:09 am ET

AARE, Sweden (AFP) – Britain opposes the use of carbon import tariffs against developing countries to encourage them to tackle global warming, Secretary of State for Energy and Climate Change Ed Miliband said on Saturday.

A bill passed by the US House of Representatives last month could allow import taxes on products made in countries that do not have statutory curbs on greenhouse gas emissions, sparking an outcry from emerging economies such as India and China.

“We are sceptical about the notion of trade tariffs as a good solution to the issues that we face in relation to climate change,” Miliband told AFP.

EU ministers shun French carbon tariff proposal

by Catherine Marciano and James Franey Catherine Marciano And James Franey – Fri Jul 24, 1:23 pm ET

AARE, Sweden (AFP) – European ministers rallied on Friday against a French proposal to introduce so-called carbon tariffs on non-EU nations that fail to agree on a new global deal on climate change.

France was a vocal supporter of carbon tariffs during negotiations on the EU’s climate package and Paris insisted Friday they remain a plausible option if no deal is struck at December’s UN climate talks in Copenhagen, Denmark.

Swedish Environment Minister Andreas Carlgren, whose country currently holds the rotating EU presidency, called on delegates at a meeting in Aare, central Sweden to reject any such measures.

“The threat of taxes to harm developing countries would seriously make negotiations more difficult,” he said, referring to the talks in the Danish capital.

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