Research Handbook on Environment, Health and the WTO
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Research Handbook on Environment, Health and the WTO

Edited by Geert Van Calster and Denise Prévost

This Handbook provides state-of-the-art analysis by leading authors on the links between the international trade regime and health and environment concerns – concerns that make up an increasing proportion of WTO dispute settlement. Research Handbook on Environment, Health and the WTO surveys fields as diverse as climate change mitigation, non-communicable diseases, nanotechnology and public health care. The volume brings to the fore the debates and complexities surrounding these issues and their implications for the international trading system.
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Chapter 15: Carbon leakage measures and border tax adjustments under WTO law

Joost Pauwelyn


One of the major obstacles toward the adoption of mandatory limits on greenhouse gas emissions is the impact of such limits on the international competitiveness of domestic firms. Limits on greenhouse gas emissions – be they in the form of regulation, a carbon tax or a cap-and-trade system – may impose extra costs on domestic industries. Where foreign firms do not bear similar costs, domestic firms may lose their competitive edge. In particular, with a domestic climate policy in place, imports from countries without mandatory carbon restrictions may gain a price advantage over domestic goods. It is exactly this asymmetry that led the US Senate to reject the Kyoto Protocol, an international agreement that did not require emission cuts from developing countries. The competitiveness impact of climate change policy may play out both at home (on the domestic market) and abroad (on world markets). It can be particularly acute for energy-intensive manufacturers such as the iron and steel, aluminium, cement, glass, chemicals and pulp and paper industries.

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