Airline Carbon Taxes: The EU vs. the World

On Tuesday and Wednesday, representatives from 23 nations gathered in Moscow to discuss their response to the European Union’s mandatory airline carbon taxes. CEI’s Fran Smith has covered this story here and here. Based on the contents of the joint letter that came out of the Moscow meetings this week, the EU (and the airline traveler) is in for a world of pain. Unless the EU backs down, this will likely turn into a trade war. China is already forbidding that its airlines pay carbon fees to the EU Emissions Trading System, and they have threatened in the past to impose either high tariffs or outright landing bans on EU airlines.

Here’s the attached list of possible actions being considered against the EU:

  1. Filing an application under Article 84 of the Chicago Convention for resolution of the dispute according to the ICAO Rules for the Settlement of Differences (Doc 7782/2);
  2. Using existing or new State legislation, regulations, or other legal mechanism to prohibit airlines/aircraft operators of that State from participating in the EU ETS;
  3. Holding meetings with the EU carriers and/or aviation-related enterprises in their respective States and apprise them about the concerns arising out of the EU-ETS and the possibility of reciprocal measures that could be adopted by the State, which may adversely affect those airlines and/or entities.
  4. Mandating EU carriers to submit flight details and other data;
  5. Assessing whether the EU ETS is consistent with the WTO Agreements and taking appropriate action;
  6. Reviewing Bilateral Air Services Agreements, including Open Skies with individual EU Member States, and reconsidering the implementation or negotiation of the ‘Horizontal Agreement’ with the EU;
  7. Suspending current and future discussions and/or negotiations to enhance operating rights for EU airlines/ aircraft operators;
  8. Imposing additional levies/charges on EU carriers/ aircraft operators as a form of countermeasure;
  9. Any other actions/ measures.

All of this spells bad news for international travel, trade, and the fragile domestic economies in Europe and the United States.