Research Handbook on Climate Change and Trade Law
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Research Handbook on Climate Change and Trade Law

Edited by Panagiotis Delimatsis

The interaction between climate change and trade has grown in prominence in recent years. This Research Handbook contains authoritative original contributions from leading experts working at the interface between trade and climate change. It maps the state of affairs in such diverse areas as: carbon credits and taxes, sustainable standard-setting and trade in ‘green’ goods and services or investment, from both a regional and global perspective. Panagiotis Delimatsis redefines the interrelationship of trade and climate change for future scholarship in this area.
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Chapter 4: Carbon taxes, PPMs and the GATT

Erich Vranes


Climate change is an example of a worldwide tragedy of the commons. The option of introducing carbon taxes has increasingly been discussed as a possible remedy, namely as an economic solution that may be both efficient and effective. However, carbon taxes tend to encounter strong opposition by domestic industries for competitiveness concerns. Therefore, and for reasons of effectiveness and equity, carbon taxes arguably need to be accompanied by border measures that apply to imported products. One type of border measure that is usually discussed in connection with carbon taxes is the instrument of border tax adjustments (BTAs). While BTAs are a classic instrument of trade policy, so far it has rarely been used in relation to environmental taxes. This contribution, therefore, concentrates on the question of the WTO consistency of carbon taxes and related-BTA schemes. Due to the lack of international cooperation, the legality of such unilateral climate measures will arguably remain topical for many years.

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