Export Rebates and Import Charges for Border Tax Adjustments Under an Upstream US GHG Tax: Estimates and Methods

In recent reports, we’ve proposed a Framework to create and implement border tax adjustments (BTAs) in the context of an upstream US GHG tax that are compatible with US obligations under World Trade Organization (WTO) agreements. Determining BTAs—export rebates and import charges—for covered greenhouse gas (GHG)-intensive products presents significant but feasible administrative challenges, especially at startup and during early years of the program. Challenges include developing required information for the large number of GHG-intensive products exported from and imported to the United States, the availability of reliable data (especially from firms in developing countries), and the need to develop capacity in affected firms around the world and in the US government to determine BTAs for covered products.To illustrate how some of these challenges could be met, this report describes how indicative, representative estimates of export rebates and import charges can be determined based on available information, as well as estimates for what they would be for a sampling of commodity products from several industrial sectors. Section 2 summarizes the technical background to determine BTAs for covered products based on the GHG index (GGI)—a critical concept and administrative index proposed in the 2020 Framework report (see footnote 1). Section 3 discusses issues and approaches to address challenges to the start-up and phase-in of BTAs in the initial years. Section 4 provides an overview of methods to determine initial estimates for GGIs. Section 5 presents a summary and conclusions. Two related documents complement this report. The first, accompanying report (see footnote 3) describes how specific facilities and operations would determine their GHG tax and GGI values for covered products they create. The second, forthcoming report (see footnote 4) contains modules with estimates of GGI values for products in about 40 sectors based on the methods described here.Click "Download" above to read the full working paper.