While some countriesbelieve carbon tariffs would give immunity to their country, few others predictthat it is just a label, and would gradually trigger trade wars.
Every nation is currently tryinghard to keep up with the laws of nature, and to adopt a lifestyle; not hurtingthe environment. Many countries are now implementing reforms that curb unfaircompetition with countries having weaker environmental protection laws. Somepowerful nations; and states are attempting to take the matter in their own hands,by initiating a carbon tariff on the imported goods. EU is aiming to imposespecial tariffs on the products imported by them restricting the emissions ofcarbon-dioxide in the products. Industries with high energy consumption, highemissions, and high exports feel the heat of the proposed carbon tariff.
Conceptually, carbon tariff is atax levied on goods that are being imported from other nations withoutregulations in limit to their greenhouse gas emissions. This is done to protectthe domestic industry from the competitive disadvantage, and also motivate theimplementing country to legislate climate policy. The impact of the carbontariffs may be even more serious than the anti-dumping measures, as it mainlytargets manufacturing industries with a high export promotion ratio.Anti-dumping measures generally target individual and specific products. China will remain the main target of the carbon tariffs of US and the EU.
China's industrial output hasrealized an average annual growth of 11.2% and its industrial capital stock hasachieved an average annual growth of 9.2%. Along with the countrys industrialgrowth, their energy consumption, and carbon-dioxide emissions also shot upwith a growth rate of 6%, and 6.3% respectively. Around 23% of the countryscarbon emissions were due to the exporting industries. China is one of the biggest bases for manufacturing exports. The carbon tariffs of EU andUS will have a deep impact on the manufacturing, and competitive abilities of China. The defensive China criticizes that the tariff proposals on the imports areinconsistent with the WTO rules, and is a de facto protectionism in the labelenvironmental protection.
Will tariffs do good?
On the contrary, some economistsbelieve that carbon tariff is not a very good idea as it will reduce theefficiency in the use and allocation of resources; including energy resource.The countries that implement the tariff will be more affected than theexporting countries. It would be a complicated task for the customs officials toassess the emissions embedded in the imports. The biggest challenge lies in therules of the international trade game. The tariff restrictions penalize thecarbon intensive goods traded across borders, and not the products consumedwithin the borders. This gives way for manipulation of trade instruments, andmisuse of political purposes. Tariffs are more likely to become a protectionisttool of the developed countries against the developing countries.
Estimates state that, as animpact of the carbon tariff rate of US$ 30, employment opportunities in theindustrial sector would drop by 1.22% during the first year, and 1.18% by thefifth year. With the carbon tariff rate of US$ 60, employment is expected to godown by 2.39% during the first year, and by 2.33% during the fifth year. Employmentcarnage is anticipated to be more in 5 industries mainly of which garment,leather and textile industries are included.
On one side, carbon tariffs arebelieved to shield the country from importing goods which are not favorable tothe environment. On the contrary, arguments do happen stating that it is merelyeco-protectionism, and would trigger trade wars.
References:
- &sec=article&uinfo=<%=server.URLEncode(2790)%>" target="_blank" class="ListParagraphCxSpFirst" style="text-align:justify;text-indent:-.25in"> http://www.carbonresources.com
Comments