IDEAS home Printed from https://ideas.repec.org/p/fdi/wpaper/791.html
   My bibliography  Save this paper

To B(TA) or not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective

Author

Listed:
  • Henrik HORN

    (Research Institute of Industrial Economics (IFN))

  • Petros C. MAVROIDIS

    (Columbia Law School)

Abstract

This paper asks two questions concerning Border Tax Adjustments for climate purposes, when viewed from a trade perspective: First, under what conditions are BTAs possible in the WTO-world? To address this issue, the paper provides a detailed discussion of the relevant law and case law. We also apply our main conclusions on what we consider to be paradigmatic cases of measures to address climate change where trade concerns are raised. We conclude that the WTO regime is no major obstacle to those aspiring to use BTAs, although the allocation of the burden of proof could be an issue. The second issue addressed is whether the economic literature on the desirability of BTAs adequately reflects concerns that have been raised in the trade policy community. Here we conclude that it has hardly addressed these concerns at all. We also point to some aspects of BTAs that would be important to take into account in a more complete analysis.

Suggested Citation

  • Henrik HORN & Petros C. MAVROIDIS, 2011. "To B(TA) or not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective," Working Papers P21, FERDI.
    • Handle: RePEc:fdi:wpaper:791
    as

    Download full text from publisher

    File URL: http://www.ferdi.fr/sites/www.ferdi.fr/files/publication/fichiers/P21_Horn_Mavroidis_WEB.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Aaditya Mattoo & Arvind Subramanian & Dominique van der Mensbrugghe & Jianwu He, 2009. "Reconciling Climate Change and Trade Policy," Working Papers 189, Center for Global Development.
    2. Horn, Henrik & Mavroidis, Petros C., 2008. "The Permissible Reach of National Environmental Policies," Working Paper Series 739, Research Institute of Industrial Economics, revised 20 Jun 2008.
    3. Messerlin, Patrick A., 2010. "Climate change and trade policy : from mutual destruction to mutual support," Policy Research Working Paper Series 5378, The World Bank.
    4. repec:hal:spmain:info:hdl:2441/5l6uh8ogmqildh09h2q83h42k is not listed on IDEAS
    5. Nicole A. MATHYS & Jaime DE MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
    6. CONCONI, PAOLA & Wouters, Jan, 2010. "Appellate Body Report, India – Additional and Extra-Additional Duties on Imports from the United States (WT/DS360/AB/R, adopted on 17 November 2008)," World Trade Review, Cambridge University Press, vol. 9(1), pages 239-263, January.
    7. Harry G. Johnson & Mel Krauss, 1970. "Border Taxes, Border Tax Adjustments, Comparative Advantage, and the Balance of Payments," Canadian Journal of Economics, Canadian Economics Association, vol. 3(4), pages 595-602, November.
    8. Irwin,Douglas A. & Mavroidis,Petros C. & Sykes,Alan O., 2008. "The Genesis of the GATT," Cambridge Books, Cambridge University Press, number 9780521515610.
    9. Patrick Messerlin, 2010. "Climate change and trade policy: From mutual destruction to mutual support," Working Papers hal-00972994, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Byeongho Lim & Kyoungseo Hong & Jooyoung Yoon & Jeong-In Chang & Inkyo Cheong, 2021. "Pitfalls of the EU’s Carbon Border Adjustment Mechanism," Energies, MDPI, vol. 14(21), pages 1-18, November.
    2. Nicole A. MATHYS & Jaime DE MELO, 2012. "Reconciling Trade and Climate Policies," Working Papers P37, FERDI.
    3. Fischer, Carolyn & Greaker, Mads & Rosendahl, Knut Einar, 2017. "Robust technology policy against emission leakage: The case of upstream subsidies," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 44-61.
    4. Christoph Böhringer & Knut Einar Rosendahl & Halvor Storrøsten, 2021. "Smart hedging against carbon leakage [An overview of the GTAP 9 data base]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 36(107), pages 439-484.
    5. Böhringer, Christoph & Rosendahl, Knut Einar & Storrøsten, Halvor Briseid, 2017. "Robust policies to mitigate carbon leakage," Journal of Public Economics, Elsevier, vol. 149(C), pages 35-46.
    6. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    7. Edward J. Balistreri & Daniel T. Kaffine & Hidemichi Yonezawa, 2019. "Optimal Environmental Border Adjustments Under the General Agreement on Tariffs and Trade," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1037-1075, November.
    8. Aaditya Mattoo & Arvind Subramanian, 2013. "Four Changes to Trade Rules to Facilitate Climate Change Action," Policy Papers 21, Center for Global Development.
    9. Kaushal, Kevin Raj, 2018. "Emission price, output-based allocation and consumption tax: Optimal climate policy in the presence of another country’s climate policy," Working Paper Series 8-2018, Norwegian University of Life Sciences, School of Economics and Business.
    10. Madison Condon & Ada Ignaciuk, 2013. "Border Carbon Adjustment and International Trade: A Literature Review," OECD Trade and Environment Working Papers 2013/6, OECD Publishing.
    11. Kevin R. Kaushal & Knut Einar Rosendahl, 2020. "Taxing Consumption to Mitigate Carbon Leakage," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(1), pages 151-181, January.
    12. Jaime de Melo & Nicole A. Mathys, 2012. "Concilier les politiques commerciales et les politiques climatiques," Revue d’économie du développement, De Boeck Université, vol. 20(2), pages 57-81.
    13. Christoph Böhringer & Knut Einar Rosendahl & Halvor Briseid Storrøsten, 2015. "Mitigating Carbon Leakage: Combining Output-Based Rebating with a Consumption Tax," CESifo Working Paper Series 5459, CESifo.
    14. Böhringer, Christoph & Bye, Brita & Fæhn, Taran & Rosendahl, Knut Einar, 2017. "Targeted carbon tariffs: Export response, leakage and welfare," Resource and Energy Economics, Elsevier, vol. 50(C), pages 51-73.
    15. Jakob, Michael, 2021. "Climate policy and international trade – A critical appraisal of the literature," Energy Policy, Elsevier, vol. 156(C).
    16. John Whalley, 2011. "What Role for Trade in a Post‐2012 Global Climate Policy Regime," The World Economy, Wiley Blackwell, vol. 34(11), pages 1844-1862, November.
    17. Petros C. Mavroidis & Damien Neven, 2018. "Things have changed (or Have they?) Tariff protection and environmental concerns in the WTO," IHEID Working Papers 04-2018, Economics Section, The Graduate Institute of International Studies.
    18. Melanie Hecht & Wolfgang Peters, 2019. "Border Adjustments Supplementing Nationally Determined Carbon Pricing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 93-109, May.
    19. Petros C. Mavroidis & Damien J. Neveny, 2018. "Things have changed (or Have they ?) Tariff protection and environmental concerns in the WTO," RSCAS Working Papers 2018/20, European University Institute.
    20. Max Åhman & Lars J. Nilsson & Bengt Johansson, 2017. "Global climate policy and deep decarbonization of energy-intensive industries," Climate Policy, Taylor & Francis Journals, vol. 17(5), pages 634-649, July.
    21. Melanie Hecht & Wolfgang Peters, 2019. "Border Adjustments Supplementing A Cap And Trade System To Combat Climate Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(04), pages 1-21, November.
    22. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    23. Susanne Droege & Carolyn Fischer, 2020. "Pricing Carbon at the Border: Key Questions for the EU," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(01), pages 30-34, April.
    24. Fischer, Carolyn & Fox, Alan K., 2012. "Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 199-216.
    25. Mattoo, Aaditya & Subramanian, Arvind, 2013. "A"greenprint"for international cooperation on climate change," Policy Research Working Paper Series 6440, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jaime de Melo, 2015. "Trade in a ‘Green Growth’ Development Strategy: Issues and Challenges," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 22, pages 553-580, World Scientific Publishing Co. Pte. Ltd..
    2. Jaime de Melo & Nicole A. Mathys, 2012. "Concilier les politiques commerciales et les politiques climatiques," Revue d’économie du développement, De Boeck Université, vol. 20(2), pages 57-81.
    3. de Melo, Jaime & Mathys, Nicole Andréa, 2012. "Reconciling Trade and Climate Policies," CEPR Discussion Papers 8760, C.E.P.R. Discussion Papers.
    4. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    5. Patrick MESSERLIN, 2011. "Climate, trade and water: A “grand coalition”?," Working Papers P23, FERDI.
    6. Antimiani, Alessandro & Costantini, Valeria & Martini, Chiara & Salvatici, Luca & Tommasino, Maria Cristina, 2011. "Cooperative and non-cooperative solutions to carbon leakage," Conference papers 332096, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Nicole A. MATHYS & Jaime DE MELO, 2011. "The Political Economy of Climate Change Policies: Political Economy Aspects of Climate Change Mitigation Efforts," Working Papers P24, FERDI.
    8. Stine Aakre, 2016. "The political feasibility of potent enforcement in a post-Kyoto climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(1), pages 145-159, February.
    9. Michael O. Moore, 2011. "Implementing Carbon Tariffs: A Fool’s Errand?," The World Economy, Wiley Blackwell, vol. 34(10), pages 1679-1702, October.
    10. Antimiani, Alessandro & Costantini, Valeria & Martini, Chiara & Salvatici, Luca & Tommasino, Maria Cristina, 2013. "Assessing alternative solutions to carbon leakage," Energy Economics, Elsevier, vol. 36(C), pages 299-311.
    11. Nicole A. MATHYS & Jaime DE MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
    12. Aichele, Rahel & Felbermayr, Gabriel, 2012. "Kyoto and the carbon footprint of nations," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 336-354.
    13. de Melo, Jaime, 2012. "Trade in a'green growth'development strategy : global scale issues and challenges," Policy Research Working Paper Series 6236, The World Bank.
    14. Rahel Aichele, 2013. "Trade, Climate Policy and Carbon Leakage - Theory and Empirical Evidence," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 49.
    15. Ahmed, Khalid, 2017. "Revisiting the role of financial development for energy-growth-trade nexus in BRICS economies," Energy, Elsevier, vol. 128(C), pages 487-495.
    16. Mona Haddad & Ben Shepherd, 2011. "Managing Openness : Trade and Outward-oriented Growth After the Crisis," World Bank Publications - Books, The World Bank Group, number 2283, December.
    17. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h2qa1ccc1 is not listed on IDEAS
    18. Ian Sheldon & Steve McCorriston, 2012. "Climate policy and border tax adjustments: Might industrial organization matter?," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 9(2), pages 7-28, Julio-Dic.
    19. Alexandre Le Vernoy & Patrick Messerlin, 2010. "Water and the WTO: Don’t kill the messenger," SciencePo Working papers Main hal-03461720, HAL.
    20. repec:hal:spmain:info:hdl:2441/5l6uh8ogmqildh09h2qa1ccc1 is not listed on IDEAS
    21. Alexandre Le Vernoy & Patrick Messerlin, 2010. "Water and the WTO: Don’t kill the messenger," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
    22. Narayanan G., Badri & Walmsley, Terrie L., 2011. "The Role of Labor Standards in International Trade: A CGE Approach," Conference papers 332097, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fdi:wpaper:791. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vincent Mazenod (email available below). General contact details of provider: https://edirc.repec.org/data/ferdifr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.