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8 - Our Alarming Climate Crisis Demands Border Adjustments Now

from Part II - Trade Policy and Trade-Related Concerns

Published online by Cambridge University Press:  05 August 2019

By
John Odell
Edited by
Manfred Elsig ,
Michael Hahn  and
Gabriele Spilker
Manfred Elsig
Affiliation:
Universität Bern, Switzerland
Michael Hahn
Affiliation:
Universität Bern, Switzerland
Gabriele Spilker
Affiliation:
Universität Salzburg
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Summary

Our climate crisis is now an emergency. While efforts at multilateral cooperation should continue, it is too late to delay legal multilateral and unilateral trade measures any longer. This chapter sketches a preliminary illustration of a border carbon adjustment (BCA) proposal that differs significantly from earlier ones. Its goals are to induce policy improvement by governments of high-polluting countries and defend the Paris Agreement. Each country that imposes positive net taxes on fossil fuel use at home should set a default BCA on an imported product from a high-emitting country equal to net fossil energy taxes applied on the competing home good throughout its supply chain. The government should deduct from this surcharge for a given import shipment to the extent that costs due to carbon energy taxes — or other measures that are comparable in effectiveness in reducing emissions — have already been paid on the import. These surcharges should exempt all exports from countries whose per capita carbon dioxide emissions are low. Such BCAs could be consistent with World Trade Organization rules and should minimize additional transaction costs on trade. Objections are addressed. Paradoxically trade itself in the long term needs carefully limited trade restrictions in the short term.

Keywords

climatecarbon adjustmentWorld Trade OrganizationParis Agreement
Type
Chapter
Information
The Shifting Landscape of Global Trade Governance
World Trade Forum
 , pp. 182 - 206
Publisher: Cambridge University Press
Print publication year: 2019

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