WTO & Border tax adjustment

Report
Carbon Fee & Dividend
with a Border Tax Adjustment
HOW DO WE DEVELOP A SOUND DOMESTIC
GREENHOUSE GAS EMISSION REDUCTION POLICY
THAT EFFECTIVELY REDUCES ATMOSPHERIC
CARBON DIOXIDE, PRESERVES DOMESTIC
COMPETITION, AND IS COMPLIANT WITH
INTERNATIONAL LAW?
Citizens Climate Lobby
2012 International Conference
The cure for climate trauma
Christopher Byrd
Tallahassee Group Leader
[email protected]
WTO- What is it?
 World Trade Organization
 Regulates trade between participating countries
 Provides a framework for negotiating and
formalizing trade agreements
 Provides dispute resolution process to enforce WTO
agreements ratified by member governments
 WTO replaced the GATT (General Agreement on
Tariffs and Trade) in 1995
 Original GATT text still in effect under WTO policy,
with 1994 modifications
WTO Significance
 U.S. and Canada are participating members of WTO,
therefore bound by WTO agreements
 Limits imposed by WTO on trade agreements
between member countries and domestic policies
that may hinder these trade agreements
 Climate legislation containing competitiveness
provisions are under WTO scrutiny
Competitiveness Provisions
 Measures implemented in specific legislation to ease
concerns of losing trade advantages internationally

“Leveling the Playing Field”
 Examples
 EU: allocates emissions allowances to GHG intensive and
trade-exposed domestic manufacturing industries at no cost:
International Reserve Allowance Program
 Australia: The Jobs and Competitiveness Program under the
Clean Energy Legislation safeguards industries that conduct
trade-exposed activities and have the most significant
exposure to a carbon price, it is to provide $9.2 billion in
assistance between 2012 and 2015. (No BTA)
Fee & Dividend
 F&D policy applying to imports could be
framed as a permissible
Border Tax Adjustment: is charged as an
extension or equivalent to the charge
imposed on domestic products subject to
F&D


Impose similar cost on imports
Must not discriminate imports against domestic
products or discriminate imports from one country
over another
BTA Must Not Be Discriminatory
 Examples of Discriminatory charges:
 arbitrary charges
 charges that favor a country’s imports over another country’s
 protectionist charges: charges that favor domestic products
over imports
 F&D can pass WTO scrutiny if the BTA is not
discriminatory
Environmental Exceptions
 BTA seen as discriminatory could still be allowed
under the Environmental Exceptions rule:

Article XX of GATT (Section VI)
 If the BTA “relat[es] to the conservation of
exhaustible natural resources if such measures are
made effective in conjunction with restrictions on
domestic production or consumption” (F&D)
Analysis: F&D effect on imports
 The F&D BTA should:



Consider local conditions in foreign countries
Include countries’ efforts to curb climate change
Consider level of economic development in countries
 Environmental justifications for F&D BTA
Competitiveness Provision:




Internalize social and external costs of carbon pollution
Account for emissions migrations
Enable countries to make greater emissions cuts
Provide incentives for countries to join in international
efforts to curb emissions
Carbon Equalization System
Harmonizing Global Climate Regulation
 A Carbon Equalization System necessary to level the
international playing field by imposing the same or
similar costs on imports as F&D policy would impose
on domestic products and possibly exempting
exports (“Linkage”)



If domestic producers lose their competitive edge, they may
“outsource” production to nations with unregulated GHG
emissions (“Leakage”)
Keeps the carbon price signal up, in a consistent and
predicable manner
Accounts for international progress under the UNFCCC, the
G8 or the Major Emitters Forum
State
E.U.
India
Germany
Cap & Trade
Or Tax
C&T
Tax - applies to coal (domestic and imported)
at the rate of Ruppies 50 (~USD 1) per ton
C&T
C&T and Tax - applies to commercial and public
U.K.
energy use
(electricity, gas, solid fuel and liquefied gases)
Italy
C&T
France
C&T
Australia
Tax - shift to cap-and-trade after 2015
Spain
C&T
Poland
C&T
Most relevant legislations
2009 Climate and Energy Package:

Emissions trading schemes

Effort Sharing Decision, aims to reduce GHGs emissions from
sectors not
included in the EU ETS such as transport, buildings, agriculture
and waste

Promotion of the use of renewable energy - Carbon capture and
storage
2007 Ethanol Production Incentives
2008 National Action Plan on Climate Change
2010 Post‐Copenhagen announced domestic actions
2007, 2008 Integrated Climate and Energy Programme
2010 Energy Concept for an Environmentally Sound,
Reliable and Affordable Energy Supply
2009 Renewable Energy Sources Act (RESA)
2001 Climate change levy
2008 Climate Change Act
2010 Carbon Reduction Commitment Energy Efficiency Scheme
2010 Feed‐in Tariffs for renewable electricity
2007 Climate Change Action Plan
2002 Strategy to Cut National Greenhouse Gas Emissions
2009 Framework Law for the implementation
of the "Grenelle de l'environnement" (Law Grenelle 1)
2010 Law Grenelle
2012 Clean Energy Legislative Package adopted these 2011 laws:

Clean Energy Act

Clean Energy Regulator Act

Climate Change Authority Act

Clean Energy (Consequential Amendments) Act
o
Dealing with charges under the carbon pricing mechanism.
Law 13/2010 amending Law 1/2005

Regulation of trade of greenhouse gas emission allowances
2001-2012 Spanish Strategy of Climate Change and Clean Energy
2008-2016 Gas and Electricity Planification
2002-2032 Spanish Forestry Plan
2001 Environmental Protection Law
Challenges and Disadvantages
 Cost of implementation - Competitiveness
 Carbon Footprinting – imports v. exports
 Others?
Sources
 Joost Pauwelyn, U.S. Federal Climate Policy and
Competitiveness Concerns: The Limits and Options of
International Trade Law
 Nichole Hines, Vy Huynh, Yuni Kim, International
Harmonization of Carbon Pricing: A Proposal for the
U.S., Geneva Graduate Institute (2012)
 Slayde Hawkins, Skirting Protectionism: A GHG-Based
Trade Restriction Under the WTO, 20 Geo. Int'l Envtl. L.
Rev. 427 (2008)
 Paul-Erik Veel, Carbon Tariffs and the WTO: An
Evaluation of Feasible Policies, 12 J. Int'l Econ. L. 749
(2009)
Questions? Internal conflicts?
Let’s BRAINSTORM

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