EU flirts with carbon import tariff

Reuters now reports that the tariff proposal has been dropped for now, but may be reconsidered at the next ETS review in 2011. Under the proposal, foreign companies from countries without emission caps would be forced to buy EU emission allowances (EUAs) to cover the emissions associated with the goods they wished to export into Europe. This would have amounted to a carbon emissions tax on those goods.

Member states and the EU Parliament have to approve any commission proposals before they become law.

EU Trade Commissioner Peter Mandelson opposed the idea last year because of the added complication it would pose for international trade negotiations. Talks to further free up world trade are already bogged down with intractable disputes between the major trading blocs of the EU, US and developing countries.

International trade is an area long beset by tit-for-tat punitive actions. A carbon tariff would have been another spanner in the works at a time when developing countries are trying secure better access to developed world markets, especially for biofuels and biofuel feedstock over which they have been critical of the EU and US import barriers.

Reuters, Business Week 7/1/08, 15/1/08

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