Controversial carbon tax

The idea of charging the CO2 content of imports from countries that are not sufficiently committed to greenhouse gas reduction had long been taboo. At the end of June, the US House of Representatives unearthed it and approved a draft law (the Waxman–Markey Bill), providing for such a charge by 2020. French President Nicholas Sarkozy is pressing a hitherto hesitant EU to follow suit. The measure targets primarily products from emerging countries like China, India and Brazil whose production is highly CO2-intensive.
The reasons underlying the launch of the idea are both economic and political. For one thing, the industrialised countries are keen to offset any competitive disadvantage that could result from CO2 reduction obligations for their industries. They also wish to prevent the relocation of production to regions where these obligations are not applicable. In addition, they are using the spectre of border carbon adjustments in an attempt to sway the emerging countries just weeks ahead of the Copenhagen climate summit towards committing to CO2 reduction targets.
Developing countries reacted angrily to the US bill. They see border carbon adjustments as disguised protectionism. They see them as an attempt by the North to shift the burden resulting from CO2 reduction obligations to the poorer countries without taking any account of their precarious financial and technological situation. Recent studies by the WTO and the United Nations Environment Programme (UNEP) further show that climate policy measures have only a limited and short-term impact on a country's competitiveness.
At the negotiations held in Bonn in August to prepare for the Copenhagen summit, the G77 and China therefore called on the industrialised countries to refrain from adopting any unilateral trade policy measures under the pretext of climate protection. India even proposed an accordingly worded provision for inclusion in the final declaration.
The developing countries are of the view that border carbon adjustments would not only breach several provisions of the UN Climate Convention, but would also violate WTO rules. For the import charge is not related to the product itself, but to the CO2 output generated during the production process. For their part, the industrialised countries point to the exceptions envisaged in the General Agreement on Tariffs and Trade GATT (Article XX), for the conservation of non-renewable natural resources. Who will ultimately prevail is still an open question. But further friction between North and South is pre-programmed.

Michel Egger, Alliance Sud

Article published in: Alliance Sud News no. 61, Autumn 2009