


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.