Global Economics

Global Warming Wars: EU Takes On France's Carbon Tax Plan


The bloc's trade commissioner argues against a French proposal to tax trade with countries that don't ratify any new global agreement to cut carbon emissions

EU trade commissioner Peter Mandelson will on Monday (18 December) speak out against a controversial French proposal on taxing trade with countries that refuse to ratify a post-Kyoto Protocol – an international agreement to limit climate change by lowering greenhouse gas emissions.

According to the Financial Times, Mr Mandelson will dismiss the so-called carbon tax as a probable breach of international trade rules and also label it as "not good politics".

He says such a tariff to cancel the competitive advantage of countries that are not cutting carbon emissions to fight global warming, would be "highly problematic under World Trade Organisation (WTO) rules and almost impossible to implement in practice".

"Not participating in the Kyoto process is not illegal. Nor is it a subsidy under WTO rules," Mr Mandelson will warn in a podcast speech to 50,000 subscribers.

French prime minister Dominique de Villepin made headlines around the world during a UN climate change conference in Nairobi last month by suggesting that countries that do not sign up to a post-2012 international treaty on climate change could potentially face extra tariffs on their industrial exports.

Countries like the US and China, he said, should not be allowed to benefit from efforts to reduce climate change without having to shoulder some of the costs or suffer from any related loss in competitiveness.

ENVIRONMENTAL DUMPING

"Europe has to use all its weight to stand up to this sort of environmental dumping," Mr de Villepin said at the time, adding that he would encourage EU member states to examine the "principle of a carbon tax on the import of industrial products from countries that refuse to commit themselves to the Kyoto Protocol after 2012."

The French government is expected to make concrete proposals about how such a tax might work by March 2007.

The idea has support in some quarters of the European Parliament. UK green MEP Caroline Lucas raised the tax issue last year, concerned about protecting European companies facing unfair competition from companies in non-Kyoto countries such as the US, which she said are avoiding the costs at the expense of the global environment.

WTO HURDLE

Both leaders and officials from countries that would be the target of these measures have dismissed the latest proposal as unlikely to get support from the WTO.

The European Commission has long favoured a dialogue approach instead of force to get countries on board the fight against climate change.

Mr Mandelson does, however, support plans to include all airlines landing or taking off in the EU in the EU's carbon emissions trading scheme, even though it is likely to upset the US and Asian countries with frequent flights to Europe.

The commission will launch the proposal on Wednesday (20 December).

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