Wednesday, January 23, 2008

Carbon Tax/Tarriff Would Spark Trade War?

Plans to force importers to pay the same greenhouse gas emission charges as domestic producers could provoke a trade war of retaliation and litigation, officials and lawyers have warned.

The plans, being considered by the US Senate and floated by the European Commission, are intended to prevent production shifting to laxer regimes abroad after countries impose carbon controls. But although supporters argue they will comply with the General Agreement on Tariffs and Trade (Gatt), the treaty that underlies the World Trade Organisation, officials and lawyers say that affected countries such as China and India are likely to resort to litigation or retaliation.

Ujal Singh Bhatia, India's ambassador to the WTO, said: "If the countries imposing such measures invoke Gatt provisions to justify them, the dispute settlement mechanism in [the] WTO would face serious challenges and create divisions along North-South lines."

Yes, it will cause something of a backlash or an attempt to evade them: probably through currency manipulation, if I had to guess. However, I really think we ought to implement a carbon tax pronto to start moving the economy away from carbon positive energy sources. You cannot implement a carbon tax without the tarriff: it knee caps your economy in a huge, huge way.

There's only one atmosphere that we all share folks and there's only one planet that humanity lives on, so we really need to act quickly on this. IMNSHO, the carbon tax is one of the best ways.

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