Domestic Climate Policies and the WTO

Under Article 15.1 of the Subsidies Agreement, determinations of injury are to be based on “positive evidence and involve an objective examination of both (a) the volume of the subsidized imports and the effect of the subsidized imports on prices in the domestic market for like products and (b) the consequent impact of these imports on the domestic producers of such products” (WTO, 1995). [...] For instance, the relative abundance of environmental endowment in the foreign producer’s country may be more capable of assimilating a given quantity of pollution than the environment of the importing country that establishes the eco-label scheme, although the impact of producing such products on the environment of the producer’s country is perfectly acceptable. [...] For example, the Nordic Swan and the EU eco-label for textiles contain criteria on the manufacturing process, such as the use of pesticides in the growing of cotton and the use of harmful substances during the process. [...] However, since a carbon tax is intended to fall most heavily on the products of carbon-intensive industries, the exclusion of these industries from coverage of the carbon tax on the ground of competitiveness reduces the effectiveness of the carbon tax in achieving its objective of reducing CO2 emissions.27 Therefore, it requires a higher tax rate for the non- exempt industries and increases the co. [...] Given the complex policy solutions required to tackle the global climate change problem and that the amendment procedure in the WTO is cumbersome, it would seem much preferable to strengthen the 23 Climate Change Convention through the Kyoto Protocol and any follow-up legal instruments rather than to propose amendments to WTO rules to achieve the goals of the Climate Change Convention.