Taxing the carbon footprint of world trade

With nations entering a new period of protectionist tariffs,  it is time to rethink the regulation of global trade.   Global trade is the driver of climate pollution and climate change.

Call for Carbon Charging:

In an article in Nature this month, three leading environmental experts have called for carbon charges rather than trade tariffs.

With President Trump imposing heavy tariffs on goods from China and the EU, and those countries following with retaliatory barriers, they fail to address the real problem of global trade.  That countries are simply exporting pollution and emissions through imports.

The authors point out that with all good intention of the Paris Climate Accord, it is unlikely that the target will be met of keeping warming below the critical 2 degrees centigrade above pre-industrial levels.  This would be so even if all countries were to meet their targets set out in their individual action plans.

Photo by Elle Dunn

Tackling carbon-intensive global trade

Only by tackling the drivers of global warming could it be possible to restrict global warming, and that means addressing the nature of global trade.

The Paris agreement has two main flaws.  First, the pledges are unbalanced.  Countries that do little will benefit from those that do more.  With a full blown trade war, it is increasingly unlikely that this situation could hold for long.  Secondly,  counties can simply export their pollution, buying carbon-intensive goods elsewhere, whilst boasting that they are 'meeting their emissions targets'.

Smart trade

The authors argue that now is the perfect time to redraft global trade, by bringing together the twin problems of trade and climate change.  To do this they argue for punitive carbon tariffs.  Instead of indiscriminate, protectionist barriers,  countries should impose a 'carbon charge' on imports.

This is not a new idea.  What is new, is the climate for action.  Last year, French President Macron called such charges 'indispensable'.   The US House of Representatives passed a Bill back in 2009, which did not receive approval from the Senate.

The authors argue that restricting trade in carbon-intensive goods by what they refer to as 'smart trade' is the only way to achieve climate targets.

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