Does Carbon tariff Violate WTO Policies

Table of Contents

1.Overview of the Issue: Carbon Tariffs and the WTO3

2. History and Purpose of WTO7

Trade Negotiations8

Trade Disputes10

Free Trade and Nondiscrimination11

3. Kyoto Protocol13

United Nations and Climate Change14

4. History of Development of Environmental Protection16

5. View of Developing Countries16

6. View of Developed Countries21

7. Environmental Interests vs Business Interests24

8. How Climate Change Policies affected Global Trading26

9. Implications of WTO Carbon Tariffs on a global scale27

Conclusion31

Works Cited33

Does Carbon tariff Violate WTO Policies

Overview of the Issue: Carbon Tariffs and the WTO

The growing scientific evidence on the harmful long term effects of environmental pollution has led to increased demands for more sustainable industrial processes, so that the quality of life for future generations is not compromised by today's business decisions (World Commission on Environment and Development, 8).

Environmental damage has therefore moved from being an externality whose costs are borne by the affected societies, to being a core factor of national and international policies through the introduction and reinforcement of “polluter pays” statutory regulations, the introduction of climate levies and carbon taxes, and international agreements to reduce the transboundary and global effects of pollution. This paper discusses the major features of these approaches to environmental sustainability through the mitigation of environmental pollution, and their consequences for decisions relating to operations management and strategy.

As the causes and effects of environmental pollution are so diverse, this paper will focus on atmospheric pollution only, and pay particular attention to anthropogenic greenhouse gas emissions. These gases have been chosen for special study because of the dominant (Houghton et al., 1990), although not unanimous (Robinson et al., 1998), scientific view that anthropogenic emissions of greenhouse gases have caused global warming and consequent threats to environmental sustainability. Furthermore, greenhouse gas emissions have also been chosen for discussion here because of the existence of a multilateral agreement (the Kyoto Protocol) to mitigate their effects and establish a system of international emissions trading in carbon permits.

The introduction of this system, combined with adherence to national regulations will therefore exert major influences on operational decisions. These decisions will include improved efficiency, changes in fuel selection, and new operational technologies, as greenhouse gases are expensive to sequestrate at the present time, and there are still environmental questions concerning their ocean storage (Department of Trade and Industry, 2000a). “End of pipe” extraction technologies followed by re-use, storage or dumping which are common ways of dealing with many other pollutants, will therefore have limited initial application in the reduction of global warming, although their application may become widespread as demand increases and costs are reduced.

The purpose of GATT was to reverse protectionist measures that had existed since the early 1930s. Following World War II, conventional wisdom held that the cause of the Great Depression of the 1930s was a decline of world trade that brought about irresponsible trade and monetary policies. Seeking to ensure a favorable balance of trade, nations frequently devalued their currencies to make their own goods cheaper in other countries, thus increasing exports.

Although the GATT succeeded in lowering tariffs significantly, ...