Tag Archives: World Trade Organization (WTO)

Taxing Carbon Emissions: EU

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The European Union wants to slash greenhouse-gas emissions to 80% below 1990 levels by 2050. It is on course to cut just half that amount. To get back on track, on February 15th, 2017 the European Parliament voted for a plan to raise the cost for firms to produce carbon. It has prompted growing calls for the bloc to tax the carbon emissions embodied in the EU’s imports. At best, such a levy will barely curb emissions. At worst, it could cause a trade war.

The EU’s latest reforms try to put up the price of carbon by cutting the emissions allowances firms are granted. They include the EU’s first border tax on carbon, levied on cement imports.

Under the EU’s reforms, steelmakers in Europe would pay up to €30 ($32) to emit a tonne of carbon, but foreign producers selling in the EU would not have to pay a cent. Putting an equivalent tax on these imports is a neat solution to this problem. “It’s wonderful in theory,” says Jean Chateau, an economist at the OECD, a club of rich countries. But “in reality it’s very problematic.”

One big problem is how to calculate the carbon in imports. This is not easy even for simple steel sheets; for items made of several bits of metal from different sources, it is hellishly complex. Some countries might even refuse to provide the information. And any method brought in for foreign firms, if not applied to local ones, could fall foul of WTO rules,..

A global carbon price would produce far greater economic benefits than border taxes, but would require closer international co-operation. A trade war is not the way to get there.

Excerpts from Steely defences: Carbon tariffs and the EU’s steel industry, Economist,  Feb. 18, at 62

Disputes between States and Foreign Investors

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Investor-state dispute settlement (ISDS)cases*are decided by extrajudicial tribunals composed of three corporate lawyers. Although ISDS has existed for decades, its scope and impact has grown sharply in the last decade. As ISDS has been written into over 3,000 Bilateral Investment Treaties (BITs) and numerous Free Trade Agreements (FTAs), the opportunities for ISDS claims are huge and growing.

Originally justified as necessary to protect foreign corporate investments abroad from nationalization or expropriation by governments controlling national judiciaries, [it is claimed that] foreign corporations have used ISDS to change sovereign laws and undermine national regulations...Already, India, Indonesia and Ecuador have advised their treaty partners that they are considering ending their BITs because of ISDS. To reduce abuses, investors could be required to first prove discrimination in national courts before being allowed to proceed to ISDS arbitration. Alternatively, national courts could exercise judicial review over ISDS awards. Also, arbitrators could be required to be independent of the ISDS process, with set salaries, security of tenure and no financial ties to litigants while investor status for ISDS claims could be defined more strictly.

Excerpts from Jomo Kwame Sundaram ISDS Corporate Rule of Law, IPS, Dec. 1, 2016

*While ISDS is often associated with international arbitration under the rules of ICSID (the International Centre for Settlement of Investment Disputes of the World Bank), it often takes place under the auspices of international arbitral tribunals governed by different rules or institutions, such as the London Court of International Arbitration, the International Chamber of Commerce, the Hong Kong International Arbitration Centre or the UNCITRAL Arbitration Rules. ISDS has been criticized because the United States has never lost any of its ISDS cases. Some say the system is biased to favor American companies and American trade over other Western countries, and Western countries over the rest of the world (wikipedia)

Seals Better than Pigs: Seal Hunting

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A (World Trade Organization) WTO appeal panel has upheld a decision that the European Union’s ban on the import of seal pelts, oil and meat is justified on moral grounds…The ruling, released Thursday in Geneva by the WTO’s Appellate Body, is one more blow to an industry that has been dying for years as a result of a successful campaign by animal-rights activists to convince international buyers that the Canadian seal hunt is inhumane.

The appeal body reversed some minor portions of a WTO panel decision, but agreed that the EU’s ban on seal products “is necessary to protect public morals” as spelled out in the General Agreement on Tariffs and Trade.  The appeal body agreed with the earlier panel decision that the ban on seal pelts imposed by the EU in 2010 undermines the principles of fair trade, but is justified because it “fulfills the objective of addressing EU public moral concerns on seal welfare.”

Canada and Norway had argued that the ruling sets a dangerous precedent because trade decisions were being made on the basis of morality rather than conservation and science. The federal Conservative government, and the two opposition parties, agree that the seal hunt, which is largely based in Newfoundland, is humane, sustainable and well-regulated…. The sealers say Canada has the highest standards for animal-welfare practices of any hunt in the world. The animal-rights groups, on the other hand, point to reports by veterinary and zoology experts who say the clubbing and shooting of seals in Canada is inhumane and should be prohibited.

The Canadian government set the quota for the seal slaughter this year at 400,000. But it is estimated that fewer than 55,000 of the animals have been killed by hunters as the season nears an end. Rebecca Aldworth, the executive director of Humane Society International/Canada, said… “I think it’s clear that the sealing industry is already over. The only question is whether the Canadian government will continue to keep it on artificial life support in the form of government subsidies, or whether it will invest in a one-time buyout of the commercial sealing industry.

Excerpts from GLORIA GALLOWAY, Canada loses bid to block European ban on seal products,  Globe and Mail, May 22, 2014