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On the effectiveness of carbon-motivated border tax adjustments

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  • John Whalley

    (the University of Western Ontario)

Abstract

As governments consider commitments to reduce carbon emissions, an accompanying question is what adjustments are appropriate to counteract any competitive disadvantage to domestic producers resulting from such commitments, particularly in the European Union, the United States and other Organisation for Economic Co-operation and Development countries.1 Considering the widely diverging levels of commitments in the area of carbon reductions, many specialists consider that some form of remedy is reasonable in order to maintain the competitiveness of domestic industries. Current thinking in global environmental policy circles is that border tax adjustments (BTAs) could be one solution, and may be included in an agreement that might emerge from Copenhagen in 2009 as part of the post-Kyoto world/United Nations Framework Convention on Climate Change post-Bali process (see also Walsh and Whalley, 2008). This text is based on more extensive research2 and focuses only on the issue of effectiveness of BTAs in relation to policies on carbon emission reductions. This debate carries important lessons for developed as well as developing countries in the Asia-Pacific region.

Suggested Citation

  • John Whalley, 2009. "On the effectiveness of carbon-motivated border tax adjustments," Working Papers 6309, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    • Handle: RePEc:esc:wpaper:6309
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    File URL: http://www.unescap.org/tid/artnet/pub/wp6309.pdf
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    References listed on IDEAS

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    1. Susanne Dröge & Claudia Kemfert, 2005. "Trade Policy to Control Climate Change: Does the Stick Beat the Carrot?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 74(2), pages 235-248.
    2. Krauss, Melvyn B & Johnson, Harry G, 1972. "The Theory of Tax Incidence: A Diagrammatic Analysis," Economica, London School of Economics and Political Science, vol. 39(156), pages 357-382, November.
    3. 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.
    4. Ben Lockwood & John Whalley, 2010. "Carbon‐motivated Border Tax Adjustments: Old Wine in Green Bottles?," The World Economy, Wiley Blackwell, vol. 33(6), pages 810-819, June.
    5. Ben Lockwood & David de Meza & Gareth Myles, 1995. "On the European Union VAT proposals: the superiority of origin over destination taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 16(1), pages 1-17, February.
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    Cited by:

    1. Carol McAusland & Nouri Najjar, 2015. "Carbon Footprint Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(1), pages 37-70, May.
    2. Marques, Alexandra & Rodrigues, João & Lenzen, Manfred & Domingos, Tiago, 2012. "Income-based environmental responsibility," Ecological Economics, Elsevier, vol. 84(C), pages 57-65.
    3. R. Seymore & M. Mabugu & J. H. van Heerden, 2012. "The Welfare Effects of Reversed Border Tax Adjustments as a Remedy under Unilateral Environmental Taxation," Energy & Environment, , vol. 23(8), pages 1209-1220, December.
    4. Flores, José Luis, 2014. "Políticas climáticas en países desarrollados: impacto en América Latina," Documentos de Proyectos 37611, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Latorre, María C. & Gómez-Plana, Antonio G., 2011. "On the differential behaviour of national and multinational firms: A within and across sectors approach," Conference papers 332168, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Chang, Ning, 2013. "Sharing responsibility for carbon dioxide emissions: A perspective on border tax adjustments," Energy Policy, Elsevier, vol. 59(C), pages 850-856.

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    More about this item

    Keywords

    carbon tax adjustments; WTO; GATT;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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