Senators attack carbon tax proposals on US imports
By Sarah O'Connor in Washington and Alan Beattie in London
Published: July 8 2009 20:29 | Last updated: July 8 2009 20:29
Senior Democrat senators said on Wednesday they would change a provision that imposes carbon taxes on imports following warnings that the clause in the House's cap-and-trade bill could spark a global trade war.
The House's bill contained tough provisions to impose carbon tariffs, aimed at protecting American companies' competitiveness against imports from countries without equivalent carbon emission controls to those in the US.
Senator John Kerry, who is helping to write the senate's version of the bill, said in a hearing on the issue on Wednesday: "We have already come to the conclusion in working on the Senate bill that we're going to try and change that provision . . . we haven't landed yet completely on where we come out".
Max Baucus, the Democrat senator who chairs the senate finance committee, said any provisions that "provoke retaliation from our trading partners will only hurt the same industries we're trying to help", adding that he was "confident we can craft legislation that strikes the right balance".
Differences in the two versions of the bill will eventually have to be reconciled before passing into law.
President Barack Obama has warned the House's carbon tariffs plan could send the wrong signal to trading partners. India called the measures "pernicious" while China said they would violate World Trade Organisation principles and amounted to "trade protectionism in the disguise of environmental protection".
A recent report from the WTO said that such "border tax adjustments" could in theory be made consistent with WTO rules, but trade lawyers stress that crafting such laws is likely to be very difficult in practice.
Gary Horlick, a prominent trade attorney in Washington, told the Senate committee on Wednesday that border measures were likely to pose daunting practical problems and retribution against US exports from its trading partners on other environmental grounds. "If we re-interpret WTO rules to allow trade barriers based on how things are made, we open up a can of worms and might permit other countries to block our biotech exports, including major items such as corn, soybeans, and other crops," he said.
Mr Horlick said that other means of levelling the playing field, such as financial compensation or giving away permits to US companies, were much less likely to invite legal challenge in the WTO. But they could still be regarded as unfair subsidies if they distorted trade, he said.
Lawyers stress the difficulty of working out the carbon content of imports to the US - particularly those that have been through multiple countries in a global supply chain - and then calculating the cost added by different carbon control regimes compared with the US system.
Despite support from some trade lawyers, the likely legal position of carbon border taxes in the WTO remains murky. There are
no unambiguously clear precedents for such measures, and decisions made by WTO arbitration panels do not in any case create binding precedents for future
litigation.
http://www.ft.com/cms/s/0/f91e0ff4-6bf2-11de-9320-00144feabdc0.html
... nevertheless,
this pisses me off.
