EU trade chief nixes carbon taxes; hails zero tariffs for “green” goods

Today the European Union’s trade commissioner, Peter Mandelson, rejected carbon border taxes as an approach to reduce carbon dioxide (CO2) emissions by imposing tariffs on carbon-intensive goods from countries that are not a party the Kyoto Protocol.

Mandelson was responding to attempts in the European Commission and by France’s prime minister Dominique de Villepin to penalize through trade sanctions countries such as the U.S. that have not signed on to drastically reduce their CO2 emissions.

In the EU, de Villepin has said, emission-reduction schemes mean that EU businesses are operating at a competitive disadvantage vis-à-vis developed countries like the U.S. and rapidly developing countries like China.

In his speech, Mandelson said:

There is one trade policy response to climate change about which I have serious doubts. That is the idea of a specific “climate” tariff on countries that have not ratified Kyoto. This would be highly problematic under current WTO rules and almost impossible to implement in practice. I also suspect it would not be good politics.

Not participating in the Kyoto process is not illegal. Nor is it a subsidy under WTO rules.

At the same time, Mandelson supported trade “incentives” such as zero tariffs for “green goods” — those that contribute to sustainability.

The EU’s sanctimony about reducing greenhouse gas emissions may represent a bit of legerdemain. See CEI’s Chris Horner’s November 2006 article that discusses this issue and an earlier article on the WTO and the EU. In his recent article, Chris points out that the individual EU countries have not met the reductions in greenhouse gas emissions they set in 1997:

Over the most recent five years for which we have data (2000-2004) Europe’s GHG emissions have increased twice as fast as those of the U.S. Carbon dioxide (CO2) remains the principal target of Kyoto-style regulation, with methane and nitrous oxide emissions having largely stabilized. The average EU country’s carbon dioxide emissions have increased over this period up to five times as fast as those of the U.S.