ECONIS Select – Reconciling Trade and Carbon Governance

07/2010

Selected for the Global Economic Symposium 2010

Never before has the nexus between environmental protection and trade measures been so concretely discussed in WTO circles. And never before has the traditional view that trade measures are both inferior to other measures and irreconcilable with WTO rules been questioned so fiercely.

The challenge is that the gap between (mostly rich) countries which are willing to cap greenhouse gas emissions through national legislation and emission trading schemes and those (mostly emerging) economies which are still relatively inactive in this respect has widened. To reach level playing field and to protect their existing industrial patterns, important members of the former group such as France propose to impose border carbon adjustment (BCA) measures on imports from the latter group through taxes. Cases for such taxes comprise the argument that such ‘green protection’ is necessary to discourage circumvention of national legislation by outsourcing “dirty” industries and to smoothen industry adjustment towards less emissionintensive technologies.

Countervailing arguments are powerful as well. They range from discrimination and protectionism in disguise to outright ineffectiveness because of inducing “dirty” non-tradable activities and negligible effects on trade flows via price changes. In short, opponents reject the view that carbon leakage could be offset via BCA measures. Yet, the ethical questions of climate change remain unsolved and crucial and it cannot be denied that trade-related activities such as transport and travel burden the environment via emissions.

• Which options could prevent international disputes on BCA measures in case there is no agreement between industrialized and developing economies?
• Should there be a “peace clause” obliging countries to seek negotiation rather than taking all disputes to the WTO and if so, how should developing countries be motivated to agree on that?
• Should developing countries be financially compensated if they commit themselves to the carbon tax system and should compensation be differentiated depending on whether the countries join now or later?

Literature selected from our database ECONIS:

• Title: Trade, climate change and sustainable development: key issues for small states, least developed countries and vulnerable economies / ed. by Moustapha Kamal Gueye ...
  Published: London: Commonwealth Secretariat, 2009
  Subject heading: External sector / International trade policy / Climate change / Sustainable development / Developing countries / 1995-2006
  Link: Table of contents
• Article: Reflections on climate change and trade / Jagdish Bhagwati
  In: Brookings trade forum. - Washington, DC: Brookings Institution Press, ISSN 1520-5479, ZDB-ID 14702022. - 2008/09, S. 171-176
  Subject heading: Climate change / Environmental organization / WTO rules / Marine fauna / Crustacea / United States / World
• Article: Five "Gs": lessons from world trade for governing global climate change / William Antholis
  In: Brookings trade forum. - Washington, DC: Brookings Institution Press, ISSN 1520-5479, ZDB-ID 14702022. - 2008/09, S. 121-138
  Subject heading: Climate protection / WTO rules / International environmental agreement
• Article: Addressing the leakage/competitiveness issue in climate change policy proposals / Jeffrey A. Frankel
  In: Brookings trade forum. - Washington, DC: Brookings Institution Press, ISSN 1520-5479, ZDB-ID 14702022. - 2008/09, S. 69-91
  Subject heading: Climate protection / Global competition / Firm location choice / Environmental tax
• Article: International trade law and the economics of climate policy: evaluating the legality and effectiveness of proposals to address competitiveness and leakage concerns / Jason E. Bordoff
  In: Brookings trade forum. - Washington, DC: Brookings Institution Press, ISSN 1520-5479, ZDB-ID 14702022. - 2008/09, S. 35-68
  Subject heading: Climate protection / Global competition / Firm location choice / Environmental tax
• Article: Institutional challenges to enhance policy co-ordination: how WTO rules could be utilised to meet climate objectives? / Mireille Cossy and Gabrielle Marceau
  In: International trade regulation and the mitigation of climate change. - Cambridge [u.a.]: Cambridge Univ. Press, ISBN 978-0-521-76619-7. - 2009, S. 371-394
  Subject heading: Climate change / Air pollution / Greenhouse gas / Environmental policy / International trade policy / Coordination / WTO rules / World
• Title: International trade regulation and the mitigation of climate change: World Trade Forum / ed. by Thomas Cottier ...
  Corporate body: World Trade Forum
  Published: Cambridge [u.a.]: Cambridge Univ. Press, 2009
  Subject heading: Climate change / Air pollution / Greenhouse gas / Environmental policy / International trade policy / WTO rules / World
  Links:
  http://www.loc.gov/catdir/enhancements/fy0907/2009011369-b.html http://www.loc.gov/catdir/enhancements/fy0907/2009011369-d.html http://www.loc.gov/catdir/enhancements/fy0907/2009011369-t.html
• Title: Climate change, trade, and competitiveness: is a collision inevitable? / Lael Brainard ... eds.
  Published: Washington, DC : Brookings Inst. Pr., 2009
  Subject heading: Climate protection / Environmental tax / Effects of taxation / WTO rules / World / United States
• Article: Border tax adjustment: a feasible way to support stringent emission trading / Roland Ismer; Karsten Neuhoff
  In: European journal of law and economics. - Dordrecht [u.a.]: Springer Science + Business Media, ISSN 0929-1261, ZDB-ID 12315928. - Bd. 24.2007, 2, S. 137-164
  Subject heading: Emissions permit / |stw| Carbon dioxide / |stw| Cross-border tax / |stw| Impact analysis
• Title: Improving institutional coherence: managing interplay between trade and climate change / Matthew Stilwell
  Corporate body: University College
  Published: Oxford: University College, 2009
  Subject heading: Climate change / Greenhouse gas / International economic relations / International trade policy / World
  Link:
  http://www.globaleconomicgovernance.org/wp-content/uploads/managing-interplay-between-trade-and-climate-change_stilwell_geg-21.pdf
• Title: Climate policy options and the World Trade Organization / Gary Clyde Hufbauer and Jisun Kim
  Published: 2009
  Subject heading: Climate protection / International environmental policy / WTO rules / International trade policy / World
  Links:
  http://www.economics-ejournal.org/economics/journalarticles/2009-29/version_1/count http://hdl.handle.net/10419/27548 [Download: 19.06.2009]
• Title: Can carbon based import tariffs effectively reduce carbon emissions? / By Michael Hübler
  Published: Kiel: Kiel Inst. for the World Economy, 2009
  Subject heading: Climate protection / Carbon dioxide / Foreign Trade / Import turnover tax / Environmental tax / International economic relations / Emissions trading / Impact analysis / Industrialized countries / Developing countries / China
  Links:
  http://www.ifw-members.ifw-kiel.de/publications/can-carbon-based-import-tariffs-effectively-reduce-carbon-emissions/can-carbon-based-import-tariffs-effectively-reduce-carbon-emissions
  http://hdl.handle.net/10419/30041 [Download: 10.02.2010]
• Article: Trade sanctions, financial transfers and BRIC participation in global climate change negotiations / Huifang Tian; John Whalley
  In: Journal of policy modeling. - New York, NY [u.a.]: Elsevier North-Holland, ISSN 0161-8938, ZDB-ID 4355325. - Bd. 32.2010, 1, S. 47-63
  Subject heading: Climate protection / Negotiations / Economic incentive / Sanction / Tariff policy / International transfer / From OECD countries / Brazil / Russia / India / China
• Title: Climate and trade policies in a post-2012 world / United Nations Environment Programme ...
  Corporate body: United Nations / Environment Programme
  Published: Nairobi: UNEP, 2009
  Subject heading: Climate change / Foreign trade policy / International trade policy / World
  Link: Table of contents
• Title: How large are the impacts of carbon motivated border tax adjustments / Yan Dong; John Whalley
  Published: Cambridge, Mass., 2009
  Subject heading: External sector / International trade policy / Environmental tax / Carbon dioxide / Trade barrier / Welfare effect / World / 2006
  Link: http://www.nber.org/papers/w15613.pdf
  Request info: - Available
• Article: Chinese trade and border tax adjustments based on environmental protection: the impact of WTO rules / Bill Butcher, Larry Kreiser, Hans Sprohge and Julsuchada Sirisom
  In: Critical issues in environmental taxation; Vol. 7:. - Oxford [u.a.] : Oxford Univ. Press, ISBN 0-19-957798-6. - 2009, S. 463-475
  Subject heading: Environmental Degradation / Environmental protection / Environmental policy / External sector / Environmental tax / WTO rules / China
• Article: "Border tax adjustment" in the context of emission trading: climate protection or "naked" protectionism? / Reinhard Quick
  In: Global trade and customs journal. - Alphen aan den Rijn: Kluwer Law International, ISSN 1569-755X, ZDB-ID 22746705. - Bd. 3.2008, 5, S. 163-175
  Subject heading: Emissions trading / Environmental tax / Tax harmonization / EU countries
• Title: Economic and environmental effects of border tax adjustments / Everett B. Peterson; Joachim Schleich
  Published: Karlsruhe: ISI, 2007
  Subject heading: Climate change / Emissions trading / EU tax law / Trade effect / Emission control / EU countries
  Links:
  http://nbn-resolving.de/urn:nbn:de:0011-n-559250
  http://publica.fraunhofer.de/documents/N-55925.html
• Title: Trade and climate change: a report by the United Nations Environment Programme and the World Trade Organization / Ludivine Tamiotti; Robert Teh; Vesile Kulaçoglu; Anne Olhoff; Benjamin Simmons ...
  Published: Geneva: WTO Publ., 2009
  Subject heading: Climate change / External sector
  Link: Table of contents
• Title: Global warming and the world trading system / Gary Clyde Hufbauer; Steve Charnovitz; Jisun Kim
  Corporate body: Peterson Institute for International Economics
  Published: Washington, DC: Peterson Inst. for Internat. Economics, 2009
  Subject heading: Foreign Economic Policy / International trade policy / WTO rules / International commercial arbitration / Climate change / Climate protection / International environmental policy / World / United States
  Link: Table of contents
• Article: The trade and environment relationships reconsidered: the case of regional trade and climate change / Tancrède Voituriez
  In: Trade, globalization and sustainability impact assessment. - London [u.a.]: Earthscan, ISBN 978-1-8440-7661-1. - 2009, S. 309-330
  Subject heading: International economic relations / International trade rules / Globalization / Trade liberalization / Climate change / Sustainable development / World
• Title: Global environmental policy and global trade policy / Jeffrey Frankel
  Published: 2008
  Subject heading: International environmental policy / International trade policy / Environmental Degradation / Climate change / Climate protection / WTO rules / Trade liberalization / Trade effect / Environmental Kuznets curve
  Link:
  http://ksgnotes1.harvard.edu/Research/wpaper.nsf/rwp/RWP08-058/$File/rwp_08_058_frankel.pdf
• Title: International trade and climate change: economic, legal and institutional perspectives / The World Bank
  Corporate body: International Bank for Reconstruction and Development
  Published: Washington DC: World Bank, 2008
  Subject heading: Climate change / External sector / International environmental agreement / Emission control / WTO rules / World
  Link: Table of contents