Peter Gallagher
In which I try briefly to describe the practical impact of WTO rules on the administration of a compensated carbon tax that is not levied on exports.
The huge volumes of recent commentary on the interaction of WTO rules and carbon emission taxes or administered markets ("emission trading schemes", ETS) contain a bewildering diversity of analysis. The matter is so contentious that the 2010 Copenhagen Accord of the UN Kyoto Protocol omitted any mention of trade measures that might be used to shore up domestic tax/ETS schemes if some large emitters (China, India, Japan) declined to make proportionate (or any) emission cuts.
In the present state of WTO jurisprudence the only thing we can say for sure is that any laws to levy a carbon tax on imports or to remit a domestic carbon tax on exports are likely to provoke nasty trade disputes; which is why the then-EC-Trade-Commissioner, Peter Mandelson, advised against putting any such border taxes on imports or tax-remissions on exports in place when the EU adopted its own ETS in 2005.
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