International Governance on Carbon Tariff and Its Vacuum in International Regime

Abstract

Drawing on the idea that countries are eligible to implement differentiated emission reduction policies based on their respective capabilities, some parties of UNFCCC attempt to weaken the principle of “Common but differentiated responsibilities(CBDR)” and impose carbon tariff on international trade. This initiative is in fact another camouflage to burden developing countries with emission cut obligation, which has no doubt undermined the development rights of developing countries. This paper defines Carbon Tariff as border measures that target import goods with embodied carbon emission. It can be import tariffs or other domestic tax measures that adjust border tax, which includes plain import tariffs and export rebates, border tax adjustment, emission quota and permit etc. For some developed countries, carbon tariffs mean to sever trade protectionism and to build trade barriers. Its theoretical arguments like “loss of comparative advantage”, “carbon leakage decreases environmental effectiveness” and “theoretical model bases” are pseudo-propositions without international consensus. Carbon tariff has become an intensively debated issue due to its duality of climate change and trade, but neither UNFCCC nor WTO has clarified this issue or has indicated a clear statement in this regard. As a result, it allows some parties to take advantage of this loophole and escape its international climate change obligation. Carbon tariff is an issue arising from global climate governance. To promote the cooperation of global climate governance and safeguard the social and economic development of developing countries, a fair and justified climate change regime and international trade institution should be established, and the settlement of the carbon tariff issue should be addressed within these frameworks. This paper argues that the international governance of carbon tariff should in cooperation with other international agreements; however, principles and guidelines regarding this issue should be developed under the UNFCCC. Based on these principles and guidelines, WTO can develop related technical operation provisions.