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Regional Trade Agreements, Emissions Bubbles, and Carbon Tariff Harmonization

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  • Yazid Dissou
  • Muhammad Shahid Siddiqui

Abstract

In the context of sub-global participation in greenhouse gas mitigation efforts, this paper investigates the effectiveness of a Canada-U.S. emissions bubble under their existing regional trade agreement. It also explores the potential economic impact of carbon tariff harmonization through the implementation of a common Canada-U.S. external border tariff adjustment as a mean to address competitiveness issues. Using a multi-region, multi-sector computable general equilibrium model, the paper finds that the creation of an emission bubble between the two countries could improve efficiency. The findings also suggest that a carbon tariff harmonization policy could give rise to distributional issues among Annex I regions and could fail to mitigate the negative competitiveness impacts of carbon abatement policies. http://dx.doi.org/10.5547/01956574.34.2.3

Suggested Citation

  • Yazid Dissou & Muhammad Shahid Siddiqui, 2013. "Regional Trade Agreements, Emissions Bubbles, and Carbon Tariff Harmonization," The Energy Journal, , vol. 34(2), pages 59-90, April.
    • Handle: RePEc:sae:enejou:v:34:y:2013:i:2:p:59-90
    DOI: 10.5547/01956574.34.2.3
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    References listed on IDEAS

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    1. Frankel, Jeffrey, 2008. "Global Environmental Policy and Global Trade Policy," Working Paper Series rwp08-058, Harvard University, John F. Kennedy School of Government.
    2. Roland Ismer & Karsten Neuhoff, 2007. "Border tax adjustment: a feasible way to support stringent emission trading," European Journal of Law and Economics, Springer, vol. 24(2), pages 137-164, October.
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