Carbon Taxes, Trade, and Border Tax Adjustments - Brian P. Flannery - Key Points

Trade and Climate Policies in the Context of Stabilizing GHG Concentrations Negotiators, economists, and policy analysts have long recognized that climate and trade policies appear to be on a collision course, without the means to reconcile differences. [...] Issues in the Design and Implementation of BTAs and Compliance with the WTO Aldy (2016) discusses economic and environmental challenges from domestic climate policies and from BTAs intended to mitigate them. [...] Finally, the design of BTA policies will inevitably encourage domestic and foreign firms to manage operations and reporting to maximize benefits under the rents available from the regulations, and these may be complex and uncertain. [...] Trachtman concludes that because of the reality of long delays, and the potential for broad international support for BTAs in spite of WTO rules, current uncertainty and risk of noncompliance with WTO law “may not be a significant deterrent to implementation of these measures.” Many have suggested that the best way forward would be for nations to meet within the WTO to address and resolve these is. [...] To capture most of the likely impacts and to avoid needless complexity, it appears that BTA should be limited to EITE industries and products.