Carbon-related border tax adjustment: mitigating climate change or restricting international trade?

AbstractBorder tax adjustments in the form of carbon taxes on products from countries with lax environmental production standards or in the form of a required participation in an emissions allowances' trading system have become a heavily debated issue under WTO law. Such an adjustment might be permissible if energy taxes as indirect taxes are applied on inputs during the production process. Compliance with the Most Favoured Nation principle has less practical importance than the not-yet settled likeness discussion under the National Treatment principle. Consequently, since the compatibility of carbon-related border tax adjustment measures is partly contested, potential justifications such as the conservation of exhaustible national resources or the protection of health (Art. XX GATT) become relevant. The application of the necessity and proportionality test requires that carbon measures are tailored so as to substantially contribute to the achievement of environmental objectives and do not create any arbitrary or unjustified discrimination.

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El apoyo a las energías renovables a la luz del Sistema Mundial de Comercio. El rol de los Acuerdos de la Organización Mundial de Comercio en permitir el desarrollo de proyectos de energías renovables

Revista Tribuna Internacional ◽

10.5354/0719-482x.2017.48018 ◽

2017 ◽

Vol 6 (12) ◽

Author(s):

Alamiro Andrés Alfaro Zepeda

Keyword(s):

Renewable Energy ◽

National Treatment ◽

Trading System ◽

The Core ◽

Appellate Body ◽

Energy Projects ◽

Recent Developments ◽

World Trading System ◽

Treatment Principle ◽

General Exceptions

The development of renewable energy projects is crucial to address many issues, from climate change to social and environmental demands. However, policies encouraging theses project may face resistance among WTO members, being contested under WTO panels. Different WTO member’s policies have been impugned regarding the so-called local requirements. Recent developments in the Appellate Body reports have shown that green policies or the support of renewable energy is compatible with the WTO law, directly or even under the general exceptions of the Article XX of the GATT. Nonetheless, the inclusion of national content requirements to access subsidies or benefits for renewable energy project are not allowed. Indeed, such measures violate the national treatment principle, one of the core principles of the world trading system.

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BORDER ADJUSTMENTS SUPPLEMENTING A CAP AND TRADE SYSTEM TO COMBAT CLIMATE CHANGE

Climate Change Economics ◽

10.1142/s2010007819500179 ◽

2019 ◽

Vol 10 (04) ◽

pp. 1950017

Author(s):

MELANIE HECHT ◽

WOLFGANG PETERS

Keyword(s):

Climate Change ◽

Carbon Taxes ◽

Cap And Trade ◽

National Treatment ◽

Carbon Pricing ◽

Treatment Principle ◽

Combat Climate Change ◽

Global Carbon ◽

Carbon Prices ◽

Border Adjustments

In the post-Paris Agreement era, the number of carbon pricing initiatives in order to combat climate change grows continuously. However, carbon prices vary substantially among countries which yields negative drawbacks in terms of carbon leakage and loss of competitiveness for firms producing in countries with more stringent regulations. Border adjustments (BAs) could help tackle these negative drawbacks through harmonizing carbon prices across countries. We model a two-stage game where Country A can choose whether to implement BAs in the first stage. In the second stage, producers from both countries compete over prices in Bertrand competition or over quantities in Cournot competition. Most analyses on BAs so far focus on carbon pricing in the form of carbon taxes. However, we observe that many governments achieve their mitigation targets by implementing a cap and trade system with some kind of free allocation of emission allowances. From the current global carbon pricing situation, we identify two conditions for the compliance with the WTO’s national treatment principle that have not been dealt with in detail in previous models: (i) the application of BAs in the form of a cap and trade system and (ii) accounting for free allocation of emission allowances. Our results show that irrespective of the competition type, BAs supplementing a cap and trade system with free allocation improve welfare if the competitive pressure is high.

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Setting Targets and the Choice of Policy Instruments for Limiting CO2 Emissions1

Energy & Environment ◽

10.1177/0958305x9400500403 ◽

1994 ◽

Vol 5 (4) ◽

pp. 327-341 ◽

Cited By ~ 4

Author(s):

Zhongxiang Zhang

Keyword(s):

Policy Making ◽

Carbon Tax ◽

Policy Instruments ◽

Economic Instruments ◽

Carbon Taxes ◽

Emission Permits ◽

Control Approach ◽

Energy Taxes ◽

And Control ◽

Tradeable Carbon Permits

Increasing concern in scientific and policy making circles about the possibility of global warming induced by the accumulation of CO2 and other GHGs in the atmosphere has advanced for consideration of policies to limit emissions of these GHGs. This paper gives an overview of policy instruments that might be used to control CO2 emissions, including command-and-control approach, energy taxes, carbon taxes, and tradeable carbon permits, with special attention paid to the economic instruments. It highlights the differences between energy taxes and carbon taxes in terms of target achievement. It presents some main findings arising from those studies on carbon taxes, with the emphasis placed on some aspects of domestic carbon tax design and incidence. The allocations of emission permits (or reimbursement of carbon tax revenues) are also discussed. Moreover, a comparison of carbon taxes with tradeable carbon permits is briefly made. This paper ends with some conclusions.

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Thailand–Cigarettes (Philippines): A More Serious Role for the ‘Less Favourable Treatment’ Standard of Article III:4

World Trade Review ◽

10.1017/s1474745612000481 ◽

2013 ◽

Vol 12 (2) ◽

pp. 163-193 ◽

Cited By ~ 2

Author(s):

WILLIAM J. DAVEY ◽

KEITH E. MASKUS

Keyword(s):

Market Analysis ◽

Legal Issues ◽

External Cost ◽

National Treatment ◽

Appellate Body Report ◽

Appellate Body ◽

Treatment Standard ◽

Treatment Principle ◽

Policy Impacts

AbstractThis paper analyzes a number of economic and legal issues raised by the Appellate Body Report in the Thai–Cigarettes case. The paper suggests two improvements that could be made to Panel procedures; supports the Appellate Body's interpretation of Article XX(d) in the present case, which seems to discard an earlier mistaken approach to Article XX; and examines, in some detail, whether the Appellate Body's application of the ‘less favourable treatment’ component of GATT Article III:4 in this and other cases is consistent with its jurisprudence under GATT Article III:2 and TBT Article 2.1. From an economics perspective, the case is straightforward on its face. However, the Appellate Body's rigorous application of the ‘less favourable treatment’ principle might not survive a fuller market analysis in terms of policy impacts on conditions of competition. Further, while we agree with the rejection of Thailand's Article XX claim, we raise the question of whether a strict national-treatment rule may be an unwarranted constraint on policy where there is a clear trade-related external cost to address.

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Motor fuel taxes and the environmental protection

Oeconomia Copernicana ◽

10.12775/oec.2011.002 ◽

2011 ◽

Vol 2 (1) ◽

pp. 29-48

Author(s):

Michał Ptak

Keyword(s):

Climate Change Policy ◽

Motor Fuel ◽

Diesel Oil ◽

External Costs ◽

The European Union ◽

Carbon Taxes ◽

Change Policy ◽

Environmental Objectives ◽

Motor Fuels ◽

Fuel Taxes

Motor fuel taxes are primarily revenue-raising taxes. However, due to high fuel consumption these taxes can be quite an efficient source of general budget revenue in many countries. It seems that the taxes on motor fuels may also be useful instruments for environmental policy or climate change policy. Environmental objectives can be achieved through change of behavior of drivers. The paper presents theoretical basis for taxes levied on motor fuels. Attention is paid to the problem of external costs of transport and internalization of external costs by applying taxes on motor fuels. The article also contains a review of the European Union countries experience with taxes levied on motor fuels (such as: petrol, diesel oil, liquid petroleum gas and compressed natural gas). The author discusses the structure of fuel taxation and tax rates in different countries. Attention is also paid to the fuel taxes which are principally intended to change behavior, not to raise revenue (particularly carbon taxes) and to the ‘environmentally friendly’ tax differentiations. The paper is based on the available literature and reports published by various organizations (Eurostat, the OECD).

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PENERAPAN PRINSIP NON-DISKRIMINATIF DAN NATIONAL TREATMENT OLEH INDONESIA DALAM RANGKA MEA BERDASARKAN UNDANG-UNDANG NOMOR 25 TAHUN 2007 TENTANG PENANAMAN MODAL

University Of Bengkulu Law Journal ◽

10.33369/ubelaj.2.1.80-90 ◽

2017 ◽

Vol 2 (1) ◽

pp. 80-90

Author(s):

Nurhani Fithriah

Keyword(s):

National Treatment ◽

Economic Resource ◽

Treatment Principle

Indonesia yang tergabung dalam PBB turut mengambil langkah awal dalam kebijakan yang diratifikasi dengan persetujuan pembentukan WTO melalui Undang-undang No.7 tahun 1994, yakni keterikatan untuk melaksanakan seluruh hasil kesepakatan perundingan Uruguay. Peraturan penanaman modal asing sesungguhnya tidak secara tegas termuat dalam perjanjian WTO, namun secara eksplisit muncul dalam rumusan prinsip-prinsip perdagangan bebas khususnya terkait prinsip non diskriminasi yang meliputi Most Favoured Nation (MFN) dan National Treatment Principle (NT). penanaman modal asing merupakan solusi bagi negara-negara berkembang, seperti Indonesia untuk mengoptimalkan pengelolaan sumber daya alam dan potensi ekonomi (economic resource) agar bernilai lebih tinggi. Dibentuknya Undang-Undang Nomor 25 Tahun 2007 tentang Penanaman Modal dimaksudkan untuk menarik investor asing dan investor dalam negeri. Permasalahan yang akan dibahas dalam tulisan ini yaitu terkait kewajiban diterapkannya Prinsip non-diskriminatif dan National Treatment atau perlakuan yang sama bagi penanam modal asing di Indonesia dan penerapan prinsip Non-Diskriminatif dan National Treatment dalam kasus Pengadaan Mobil Nasional Indonesia. Kesimpulan yang didapat yakni Pemerintah Indonesia sudah menerapkan prinsip Non-Diskriminatif dan National Treatment dengan menerapkan prinsip tersebut di dalam Undang-undang Nomor 25 Tahun 2007 tentang Penanaman Modal. Indonesia juga menerapkan Prinsip Non-Diskriminatif dan National Treatment dalam Kasus Pengadaan Mobil Nasional Indonesia dengan menjalani putusan yang mewajibkan Pemerintah Indonesia mencabut semua Keputusan Presiden beserta Peraturan lainnya yang terkait dengan persyaratan kandungan lokal.

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