CARBON TARIFFS AND THE WTO AN EVALUATION OF FEASIBLE POLICIESWord格式.docx

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JournalofInternationalEconomicLaw

September,2009

GeneralArticle

*749CARBONTARIFFSANDTHEWTO:

ANEVALUATIONOFFEASIBLEPOLICIES

Paul-ErikVeel[FNa1]

Copyright©

2009byOxfordUniversityPress;

Paul-ErikVeel

ABSTRACT

BoththeEuropeanUnion,whichcurrentlyhasanemissionstradingschemeforgreenhousegases,andtheUSA,whichisconsideringimplementingsuchaprogram,areexploringthepossibilityofincludingforeignproducersinthatprogrambyrequiringimportersofforeigngoodstopaychargesrelatingtotheamountofCO2emittedintheproductionofthosegoods.ThisarticleexaminesthelegalityofsuchmeasuresunderWTOlaw.Whileacademicliteraturehasinrecentyearsconsideredcarbontariffsintheabstract,thisarticlecontextualizesthatdiscussionbyanalyzingEuropeanandAmericanproposalstoenactcarbontariffs,focusingprimarilyonthe2008Lieberman-WarnerBill.Thisarticleconcludesthatcarbontariffsare,subjecttoanumberofconstraints,generallypermissibleunderWTOlaw.However,italsoarguesthatwhilecarbontariffsmaygenerallybelegallypermissible,additionaldomesticpoliticalconstraintsmaysignificantlylimitthesetoflegalcarbontariffswhicharepracticallyfeasibleinanygivenstate.Thisarticlepositsthatanymeaningfuldiscourseoncarbontariffsmustincorporatebothpoliticalandlegalconstraints,anditseekstocontributetothisdiscoursebyidentifyingtherelevantconstraintsandexploringcertainpolicyoptionswhichcouldsatisfythoseconstraints.

I.INTRODUCTION

Asaresponsetoconcernsaboutanthropogenicclimatechangethroughgreenhousegasemissions,andinanattempttofulfilltheirobligationsundertheKyotoProtocol,anumberofjurisdictionshaveenactedorareconsideringenactingeithercap-and-tradeschemesforCO2emissionsorcarbontaxes.However,suchregimesimposeadditionalcostsondomesticproducersrelativetoforeignproducers,andthishasgivenrisetoconcernsaboutthecompetitivenessofdomesticfirmsand'

leakage'

ofcarbonemissionstootherjurisdictionswithlessstringentpolicies.Whilethereare*750anumberofpotentialpolicyresponsestotheseconcerns,[FN1]themeasurethathasbeenthemosthotlydebatedinrecentyearsandisthemostlikelytobeimplementedbystatesisa'

carbontariff.'

Aslegislativemeasurestoimplementsuchtariffsprogress,suchmeasuresareattractingincreasedscrutinyintermsoftheircompliancewithinternationaltradelaw;

forexample,China,amajoropponentofcarbontariffs,hasstatedthatitbelievesthatcarbontariffswouldviolateWTOrules.[FN2]ThisarticlewillthoroughlyexaminethepermissibilityofsuchcarbontariffsunderWTOlaw.

Thescopeofthisarticleislimitedtodiscussingtheseso-called'

carbontariffs,'

whicharedefinedhereasanymeasurewhichimposesalevyonanimportedgoodonthebasisofeithertheCO2emittedintheproductionofthatgoodspecificallyorontheCO2emissionsorCO2emissionreductioneffortsoftheproducingcountrygenerally.Theterm'

carbontariff'

maybemisleading,assuchmeasuresarenotnecessarilytariffsinthetraditionalsense.Suchmeasuresare,asdiscussedbelow,generallybettercharacterizedaschargesleviedonimportswhicharemeanttoequalizethechargespaidbydomesticproducersfortheirCO2emissions.Notwithstandingthepotentialconfusion,giventhatthetermcarbontariffisoftenusedinpopularparlancetorefertosuchmeasures,thisarticleadoptsthatterm,hopingthatthisclarificationwillpreventconfusionthroughoutthisarticle.Thisarticledoesnotdiscussothersimilarbordercharges,suchasenergytaxadjustmentsattheborder,whichhavebeendiscussedelsewhere.[FN3]Italsodoesnotdiscussthetrade-relatedaspectsofothermeasuresstatesmightpotentiallytaketolimitgreenhousegasemissions,suchassubsidiesforgreentechnology[FN4]orotherdomesticregulatoryregimes.[FN5]Rather,itfocusesspecificallyoncarbontariffsasdefinedabove,assuchtariffshavebeen*751consideredinsomedepthoverthepastyearbyboththeUSAandtheEuropeanUnion（EU）.

Whiletherehasbeenmuchliteratureinrecentyearsonthepermissibilityofcarbontariffs,thatliteraturehasgenerallyconsideredcarbontariffsintheabstract.ThisarticlewillcontextualizethatdiscussionbyanalyzingEuropeanandAmericanproposalstoenactcarbontariffs.Morespecifically,itwillprobethevalidityofcarbontariffsunderWTOlawthroughadetailedanalysisoftheprovisionsoftheLieberman-WarnerBill,abillproposedintheUSSenatein2007whichwouldhaveseentheintroductionofanAmericancarbontariff.Usingthisbillasafoil,thisarticleconcludesthatcarbontariffsare,subjecttoanumberofconstraintsontheexactstructureofthosetariffs,generallypermissibleunderWTOlaw.

However,italsoarguesthatwhilecarbontariffsmaygenerallybelegallypermissible,additionaldomesticpoliticalconstraintsmaysignificantlylimitthesetoflegalcarbontariffswhicharepracticallyfeasibleinanygivenstate.Thisarticlepositsthatanymeaningfuldiscourseoncarbontariffsmusttakeintoaccountbothpoliticalandlegalconstraints,anditseekstocontributetothisdiscoursebyidentifyingtherelevantconstraintsandexploringcertainpolicyoptionswhichcouldsatisfythoseconstraints.Astheprimarypurposeofthisarticleistoexaminethefeasibilityofsuchtariffs,thisarticledoesnotpurporttoreachanydefinitiveconclusionsontheultimatedesirabilityofenactingsuchtariffs.However,itdoesultimatelysuggestthatstatesshouldexercisecautioninenactingsuchtariffs.

Thisarticlewillproceedasfollows.Parttwoprovidesanoverviewoftheeconomicandpoliticaljustificationsforcarbontariffsaswellassomeoftheirpotentialpitfalls.PartthreeprovidesadetailedoverviewofclimatechangepolicyintheEUandtheUSA,withaparticularfocusonrecentproposalsforcarbontariffsfromthosejurisdictions.PartfourexaminesthelegalityofcarbontariffsunderWTOlawandexplorestheconstraintsthatWTOlawplacesontheirstructure.Partfivethenintegrateslegalandpoliticalconstraintsforthepurposeofbrieflyoutliningfeasiblepolicyoptionsfordealingwithcompetitivenessconcerns.Partsixthenprovidesabriefconclusion.

II.POLICYCONSIDERATIONSRELATINGTOCARBONTARIFFS

PriortoexaminingproposalsforcarbontariffsorexaminingtheWTO-legalityofsuchtariffs,itisimportanttounderstandwhycountriesareconsideringimposingsuchtariffs.Thissectionfirstexaminesthreereasonswhystatesmaydecidetoimposecarbontariffstocomplementdomesticcap-and-tradesystemsorcarbontaxes:

'

ofCO2emissions,competitivenessconcerns,andpoliticaleconomyconsiderations.

Onerationaleadvancedforcarbontariffsisthattheyprevent'

ofCO2emissionstoforeigncountriesthatdonothaveeffectivecap-and-tradesystemsorcarbontariffs.Thenotionhereisthatwithoutcarbontariffs,*752firms--especiallyinthoseindustrieswhichhaverelativelyhighCO2emissionswhichcannotbeabatedatlowcost--thatarerequiredtopaycarbontaxesorpurchaseemissionallowanceswhenoperatinginthatjurisdictionmayrelocatetoaforeignjurisdictionwhichdoesnotimposesimilarchargesonfirms'

CO2emissions.[FN6]Producinginthatforeignjurisdiction,thefirmcanthenexportitsproductsbacktoconsumersinthejurisdictionwiththeCO2emissionschargeswhichitleft.Inthesecircumstances,theabatementofCO2emissionswhichthehomejurisdiction'

semissionschargewassupposedtorealizedoesnotactuallyoccur,asthefirmhasavoidedthechargesbyrelocatingitsoperationsandmerelyemittingtheCO2inanotherjurisdiction.[FN7]Acarbontariffisintendedtolessenornegatethiseffectbyensuringthatfirmsproducingformarketsinaparticularjurisdictioncannotevadethechargesbyrelocatingtheiroperationstoaforeignjurisdiction.

Asecondandrelatedeconomicrationaleforcarbontariffsisthattheyensurethatforeignproducersincountrieswithoutcarbontaxesorequivalentschemesdonotbenefitfromanartificialcomparativeadvantagestemmingfrommorelaxregulationsongreenhousegasemissions.Thenotionofacomparativeadvantagerestsontheideathatthosecountriesthatareabletoproducecertaingoodsrelativelymoreefficientlythanothersshoulddoso.[FN8]Whilenormallyweviewitaseconomicallyoptimalforcountriestoexploitwhatevercomparativeadvantagetheymighthave,thecomparativeadvantageflowingfromamorepermissiveregimeforgreenhousegasemissionsisdifferentfromotherformsofcomparativeadvantage,asitresultsinthenegativeexternalityofincreasedglobalwarming.[FN9]Althoughitremainsdesirableforthosecountriesthatarerelativelymostefficientatproducingaparticulargoodtoproduceit,thenotionofefficiencynecessarilyneedstoincludethose*753externalitieswhichariseasaresultofthatproduction.CarbontariffseffectivelyforceforeignproducerstointernalizetheexternalityofCO2emissions,atleasttothesamedegreeasdodomesticproducers.

Whilebothoftheserationalesprovideeconomicjustificationsforcarbontariffs,muchof