Lack of Global Agreement on Climate Change will lead to Trade Friction

Copenhagen was a disaster and there has been no agreement on how to proceed with policies on a global basis to deal with the ever growing problem of climate change and global warming. Its each country adopting its own policies and targets with reducing carbon emissions, which can only work on a local or at best a regional level not at a global level. There are some countries going ahead with their own carbon reduction policies which will lead to conflict with trade partners . Domestic goods/services with carbon mitigation costs will have a disadvantage with imported good with no such problems.

Carbon tariffs on imports risk trade war – EU study — Reuters

The European Union is considering border tariffs on imports from more polluting countries, but an initial assessment shows such levies could risk sparking trade wars, draft documents show.

“Border measures risk clashing with the obligations under the WTO (World Trade Organization),” said a draft European Commission study looking at the cost of increasing EU curbs on climate-warming emissions.

The Commission, the 27-country EU’s executive, said it would continue to look at how imports might be included in the Emissions Trading Scheme, the EU’s carbon market and its main tool against climate-warming emissions.

But the initial assessment was that such measures would be fiendishly complex to calculate fairly, create a huge administrative burden and risk a trade conflict.

“The introduction of border measures may also trigger retaliatory measures and even hinder international negotiations,” added the document, seen by Reuters. “The system could at best only be envisaged for a very limited number of standardized commodities, such as steel or cement.”

Border tariffs on countries that do not play their part in fighting climate change are a hot topic in the United States, as it negotiates its own climate laws.

“Similar proposals are also being discussed in the U.S., and obviously any further political and operational steps taken in this direction should be taken together,” said a related EU draft.