Border Carbon Ajustment in Europe and Trade Retaliation: What would be the Cost for European Union?
Unilateral climate policy, such as carbon pricing, represents an additional cost to the economy, especially to energyintensive industrial sectors, as well as those exposed to international competition. A border carbon adjustment (BCA) is often presented as an attractive policy option for countries that want to go ahead without waiting for a global climate agreement. We used the computable general equilibrium model MIRAGE-e to simulate the impact of the introduction of a BCA on imports of energy intensive products in EU and EFTA countries and to evaluate the export losses their main trade partners would suffer. Given that a BCA is a trade measure, it would certainly lead to disputes at the World Trade Organization (WTO). If the BCA is considered illegal, the losses suffered by some partners may justify retaliation, as authorized by a WTO dispute settlement. The overall aggregated impacts of these measures would be negative but marginal, meaning that neither the BCA nor trade retaliation would have a marked impact on consumers’ real income or GDP, while prohibitive retaliatory tariffs are more likely to target sensitive products in the EU. A BCA would ultimately be a signal of the EU’s willingness to maintain an ambitious climate policy.
|Date of creation:||Nov 2013|
|Date of revision:|
|Contact details of provider:|| Postal: 113, rue de Grenelle, 75700 Paris SP07|
Phone: 33 01 53 68 55 00
Fax: 33 01 53 68 55 01
Web page: http://www.cepii.fr
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul Veenendaal & Ton Manders, 2008. "Border tax adjustment and the EU-ETS, a quantitative assessment," CPB Document 171, CPB Netherlands Bureau for Economic Policy Analysis.
- Peter Holmes & Tom Reilly & Jim Rollo, 2010.
"Border Carbon Adjustments and the Potential for Protectionism,"
Working Paper Series
0610, Department of Economics, University of Sussex.
- Peter Holmes & Tom Reilly & Jim Rollo, 2011. "Border carbon adjustments and the potential for protectionism," Climate Policy, Taylor & Francis Journals, vol. 11(2), pages 883-900, March.
- Böhringer, Christoph & Balistreri, Edward J. & Rutherford, Thomas F., 2012. "The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)," Energy Economics, Elsevier, vol. 34(S2), pages S97-S110.
- Dieter Helm & Cameron Hepburn & Giovanni Ruta, 2012.
"Trade, climate change, and the political game theory of border carbon adjustments,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 28(2), pages 368-394, SUMMER.
- Dieter Helm & Cameron Hepburn & Giovanni Ruta, 2012. "Trade, climate change and the political game theory of border carbon adjustments," GRI Working Papers 80, Grantham Research Institute on Climate Change and the Environment.
- Stéphanie Monjon & Philippe Quirion, 2010.
"How to Design a Border Adjustment for the European Union Emissions Trading System?,"
2010.36, Fondazione Eni Enrico Mattei.
- Monjon, Stéphanie & Quirion, Philippe, 2010. "How to design a border adjustment for the European Union Emissions Trading System?," Energy Policy, Elsevier, vol. 38(9), pages 5199-5207, September.
- S. Monjon & Philippe Quirion, 2010. "How to design a border adjustment for the European Union Emissions Trading System?," Post-Print hal-00719254, HAL.
- Guillaume Gaulier & Soledad Zignago, 2010.
"BACI: International Trade Database at the Product-Level. The 1994-2007 Version,"
2010-23, CEPII research center.
- Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
- Scott Barrett, 2011. "Rethinking Climate Change Governance and Its Relationship to the World Trading System," The World Economy, Wiley Blackwell, vol. 34(11), pages 1863-1882, November.
- Houssein Guimbard & Sébastien Jean & Mondher Mimouni & Xavier Pichot, 2012.
"MAcMap-HS6 2007, an Exhaustive and Consistent Measure of Applied Protection in 2007,"
CEPII research center, issue 130, pages 99-122.
- Houssein Guimbard & Sébastien Jean & Mondher Mimouni & Xavier Pichot, 2012. "MAcMap-HS6 2007, an exhaustive and consistent measure of applied protection in 2007," Working Papers 2012-10, CEPII research center.
- Jean Fouré & Agnès Bénassy-Quéré & Lionel Fontagné, 2013.
"Modelling the world economy at the 2050 horizon,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 21(4), pages 617-654, October.
- Stéphanie Monjon & Philippe Quirion, 2011.
"A border adjustment for the EU ETS: reconciling WTO rules and capacity to tackle carbon leakage,"
Taylor & Francis Journals, vol. 11(5), pages 1212-1225, September.
- Stephanie Monjon & Philippe Quirion, 2011. "A border adjustment for the EU ETS: reconciling WTO rules and capacity to tackle carbon leakage," Post-Print hal-00715462, HAL.
- Bown, Chad P. & Ruta, Michele, 2008. "The economics of permissible WTO retaliation," WTO Staff Working Papers ERSD-2008-04, World Trade Organization (WTO), Economic Research and Statistics Division.
- Yvan Decreux & Hugo Valin, 2007.
"MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics,"
2007-15, CEPII research center.
- Decreux, Yvan & Valin, Hugo, 2007. "MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics," Working Papers 7284, TRADEAG - Agricultural Trade Agreements.
- Löschel, Andreas & Alexeeva-Talebi, Victoria & Mennel, Tim, 2008. "Climate Policy and the Problem of Competitiveness: Border Tax Adjustments or Integrated Emission Trading?," ZEW Discussion Papers 08-061, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Kuik, Onno & Hofkes, Marjan, 2010. "Border adjustment for European emissions trading: Competitiveness and carbon leakage," Energy Policy, Elsevier, vol. 38(4), pages 1741-1748, April.
- repec:dau:papers:123456789/7940 is not listed on IDEAS
- repec:dau:papers:123456789/10122 is not listed on IDEAS
- Lionel Fontagné & Jean Fouré & Maria Priscila Ramos, 2013. "MIRAGE-e: A General Equilibrium Long-term Path of the World Economy," Working Papers 2013-39, CEPII research center.
- 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.
- repec:zbw:hohpro:346 is not listed on IDEAS
- Rob Dellink & Gregory Briner & Christa Clapp, 2011. "The Copenhagen Accord/Cancún Agreements Emission Pledges For 2020: Exploring Economic And Environmental Impacts," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 53-78.
When requesting a correction, please mention this item's handle: RePEc:cii:cepidt:2013-34. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.