If you thought getting rich and poor countries to sit down at the same table to negotiate a new climate treaty was hell, just wait till the green trade wars begin. European and U.S. lawmakers are weighing bills to impose taxes on trade partners who fail to reduce their carbon footprint. These border tax adjustments are meant to eliminate the unfair trade advantage gained when states skimp on cutting greenhouse gases--and then sell to nations with costlier controls. The different standards can lead to "carbon leakage," when developing countries with lax standards lure companies away from stricter economies. The only solution, say advocates, is a tax.
Others say the taxes are a green stick, wielded to force developing nations into a global climate compact. Either way, in practice they would be a logistical, legal, and diplomatic nightmare. How much more carbon is emitted when a tennis shoe is made in Shanghai rather than San Francisco? And when parts come from a supply chain spread throughout half the world, who foots the bill? Never mind that the U.N. Climate Convention expressly prohibits "arbitrary or unjustified mitigation measures that could affect international trade."
For more: The Coming Battles Over Green Trade - Wealth of Nations Blog - Newsweek.com
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