Climate change and trade: taxing carbon at the border?
This recent study analyses the economic and political consequences of introducing a tax on the carbon content of imported goods at EU borders and whether such a tax would be compatible with WTO rules.
This study analyses the economic and political consequences of introducing a tax on the carbon content of imported goods at EU borders and whether such a tax would be compatible with WTO rules. The major findings are: A CO2 border tax or import tariff would increase global welfare; Such a carbon import tariff can be made to be compatible with WTO rules; There are no insurmountable practical obstacles to introducing such a tariff;
and The equity concerns of the UNFCCC could be taken into account by rebating the proceeds of the tariff to those countries manifestly unable to shoulder the burden themselves.
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