India Opposes Carbon Tax On Imports

(WSJ-Livemint.com)

India has opposed suggestions that countries that have cap-and-trade schemes to control carbon emissions—mostly developed countries—impose a carbon tax on imports from nations that don’t have such measures in place, made at the ongoing global climate talks in Bonn.

“The matter of any unilateral trade measure on imports in the name of climate action raises some concerns regarding the success of our discussions,” Vijay Sharma, secretary, ministry of environment and forests, said in his intervention on Tuesday.

“Such measures would only be tantamount to green protectionism and may burden the affected countries, particularly the developing countries, by subjecting them to similar mitigation obligations as of developed countries without any financial support,” Sharma said.

Developed and developing nations have been locked in a pitched battle over sharing the burden of reducing global carbon emissions, which scientists believe lead to global warming. Read more here.

U.S. Senators Unveil Climate Bill with ‘Carbon Tariff’ Provision

(Bridges Weekly)

United States Senators John Kerry and Joe Lieberman introduced new draft climate legislation on Wednesday, ten months after the House of Representatives passed its own bill to cut US emissions of greenhouse gases.

Senators Kerry, a Democrat, and Lieberman, an Independent, are the chief sponsors of the nearly 1,000-page piece of legislation, which aims to bolster the U.S. contribution to addressing climate change while spurring economic growth and creating jobs at home. The bill is in line with the United States’ official international position to cut its emissions of carbon dioxide to 17% of 2005 levels by 2020. Read more here. An official 21-page summary of the bill is available here: here.

Carbon Tariffs on Imports Risk Trade War: EU Study

(MoneyControl.com)

The European Union (EU) is considering border tariffs on imports from more polluting countries, but an initial assessment shows such levies could spark trade wars, draft reports show. Two European Commission reports do not explicitly reject a push for border tariffs by France and Italy, but say they would be fiendishly complex to calculate, create a huge administrative burden and risk trade conflict.

“Border measures risk clashing with the obligations under the World Trade Organisation (WTO),” said one study looking at the cost of increasing EU curbs on climate-warming emissions.

France and Italy are worried that their industries, which pay for EU permits to emit carbon dioxide, will lose out to cheaper imports from countries that impose no such charges. Read more here.

EU Trade Chief-Designate Rejects Carbon Border Tariffs

(Reuters – Pete Harrison and Darren Ennis)

The European Union should not impose border tariffs on goods from countries that fail to cut back their climate-damaging emissions, the EU’s trade commissioner-designate said on Tuesday.

“I don’t think that’s the right approach myself,” Karel de Gucht told members of the European Parliament, which will vote whether to approve the European Commission line-up on January 26. “It’s an approach that will run into many practical problems.”

Europe has pledged to cut its emissions of carbon dioxide, which are blamed for climate change, to a fifth below 1990 levels over the next decade. But manufacturers worry that the cost of cleaning up factories and power-generators will make their products more expensive and less attractive than cheap imports from rivals in India and China.

Some politicians, particularly in France, have said that imposing carbon tariffs on goods from carbon-intensive manufacturing regions would level out the playing field. Read more here.

Carbon Border Measures Seen Breaking WTO Trade Rules

(Reuters – Jonathan Lynn)

Border measures to protect domestic manufacturers from unfair foreign competition as part of climate change legislation could run foul of global trade rules, a Brussels think tank said on Thursday. Such border measures could also be economically unworkable, said Fredrik Erixon, director of the ECIPE research institute.

"Many countries are going to think twice because they know they are going to unleash quite hard responses, very likely retaliation, from other countries," Erixon told a conference call about a study on trade and climate. "It is difficult to see how they are going to be squared with basic rules," he said. Read more here.

The full ECIPE paper can be accessed here. (PDF — 31 pages)

U. S. Climate Bill Would Be “Disaster”

(Sheldon Alberts — Canwest News Service)

Jim Prentice, the Minister of the Environment, yesterday warned U. S. lawmakers to drop proposed trade sanctions on imports from countries with higher levels of greenhouse gas emissions, saying the measure would be a “prescription for disaster” for the global economy.

In the Harper government’s toughest critique yet of draft U. S. climate legislation, Mr. Prentice told a Washington audience a proposal to slap a “carbon-border adjustment” fee on foreign manufacturers violates the core principles of international trade.

In addition, any U. S. decision to impose such a trade tariff threatens the chances of reaching an international climate change deal later this year in Copenhagen, Mr. Prentice said.

“Trade protectionism in the name of environmental protection would be a prescription for disaster for both the global economy and the global environment,” the Minister said in remarks at the State Department to the Conference of the Americas. Read more here.

Canada’s Environment Minister to Speak Against U.S. Green Tariff Proposal

(CBC News)

Canada’s environment minister was to tell an American business organization that tariffs shouldn’t be imposed on imports from countries that allow greater greenhouse-gas emissions than the United States.

“Trade protectionism in the name of environmental protection would be a prescription for disaster for both the global economy and the global environment,” says an advance copy of Jim Prentice’s speech to the Council of the Americas. “And the threat of such unilateral action is a threat to global progress at this critical time in multilateral negotiations.” Prentice was speaking to the business group Wednesday in Washington.

The U.S. House of Representatives introduced a bill in March proposing hard caps on emissions as well as tariffs on imports from countries with more lax greenhouse-gas rules that the United States. Read more here.

Carbon Tariff Might Be Legal as a VAT

(National Post – Krista Lucenti)

Lawyers and consultants can expect a growth industry in carbon taxes

Notwithstanding a barrage of gloomy economic news, pressure is mounting on the U.S. and Canadian governments to take firm action to limit carbon dioxide emissions through regulation, caps and taxes. Some states and provinces have acted already, and even President George W. Bush has started talking about hard limits on emissions.

Meanwhile, a strong Canadian dollar and a looming U.S. recession depress our exports, while high energy prices squeeze Canadian manufacturers. Businesses worry that imposing a carbon tax or limits on emissions would further contribute to rising prices of exports and cause Canadian industries to lose their competitiveness vis-à-vis their foreign, non-taxed, competitors such as China, India and Brazil. The pressure would be particularly acute in energy intensive industries such as chemicals and steel.

To deal with the competitiveness problem, one proposal is to levy a carbon tariff on imports, set at the equivalent domestic rate. Such a tariff would “level the playing field” by eliminating foreign producers’ tax advantage.

But the idea raises a thorny question: Is it legal, under the rules and regulations of the World Trade Organization (WTO), to impose tariffs selectively on imports, on the basis of their believed upstream CO2 emissions? Click here for the complete article.