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Environmental tariff

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Environmental tariff

An Environmental tariff, also known as a green tariff or eco-tariff, is an import or export tax placed on products being imported from, or also being sent to countries with substandard environmental pollution controls. They can be used as controls on global pollution and can also be considered as corrective measures against "environmental races to the bottom" and "eco-dumping".[1]

International trade vs. environmental degradation

There has been debate on the role that increased international trade has played in increasing pollution.[2] While some maintain that increases in pollution which result in both local environmental degradation and a global tragedy of the commons are intimately linked to increases in international trade, others have argued that as citizens become more affluent they'll also advocate for cleaner environments. According to a World Bank paper:

"Since freer trade raises income, it directly contributes to increasing pollution levels via the scale effect. However, it thereby induces the composition (and) technique effects of increased income, both of which tend to reduce pollution levels".[3][4]

Early tariff implementation proposal

Although the United States has in the past been accused of dragging its feet on implementing tough new anti-pollution measures, it was the originator of a legislative proposal suggesting an environmental tariff be applied against exporting countries whose exports gained significant cost advantages due to less stringent environmental regulations. The proposed legislation was tabled as the International Pollution Deterrence Act of 1991 and was introduced in its Senate in April of that year.[5]

Proposed International Pollution Control Index

A notable feature of the proposed U.S. International Pollution Deterrence Act was the international pollution control index it cited within its Section 5, which read:[6]

INTERNATIONAL POLLUTION CONTROL INDEX
Section 8002 of the Solid Waste Disposal Act (42 U.S.C. 6982) is amended by adding the following new subsections at the end thereof:
`(t) The Administrator shall prepare, within one hundred and twenty days of the enactment of this section and yearly thereafter, a pollution control index for each of the top fifty countries identified by the Office of Trade and Investment of the Department of Commerce based on the value of exports to the United States from that country's attainment of pollution control standards in the areas of air, water, hazardous waste and solid waste as compared to the United States. The purpose of this index is to measure the level of compliance within each country with standards comparable to or greater than those in the United States. The Administrator shall analyze, in particular, the level of technology employed and actual costs incurred for pollution control in the major export sectors of each country in formulating the index.

Agitation against use of environmental tariffs

Environment tariffs were not implemented in the past, in part, because they were not sanctioned by multilateral trade regimes such as the General Agreement on Tariffs and Trade (GATT), a fact which generated considerable criticism and calls for reform.[1]

Additionally, many foreign factory owners in newly industrialized countries and underdeveloped countries saw the attempts to impose pollution controls on them as suspicious...

"...seeing it as a threat to their growth and fearing that developed countries would attempt to export their preferences for pollution control or to place 'environmental' tariffs on imports from countries with lower standards."[7]

See also

References

  1. ^ a b Kraus, Christiane (2000), Import Tariffs as Environmental Policy Instruments, Springer, ISBN 0-7923-6318-3, ISBN 978-0-7923-6318-7
  2. ^ Horvath, John Salami Tactics, Telepolis, at Heise.de online, 2000. Retrieved 2009-10-14.
  3. ^ Trade, Global Policy, and the Environment, Pg. 56, Fredriksson, World Bank, World Bank Publications, 1999, ISBN 0-8213-4458-7, ISBN 978-0-8213-4458-3
  4. ^ Dean, Judith M & Lovely, Mary E (2008), Trade Growth, Production Fragmentation, and China's Environment, Pgs. 3 & 5, National Bureau of Economic Research, Working Paper 13860, Cambridge, MA [1]
  5. ^ International Trade and Climate Change: Economic, Legal, and Institutional Perspectives Pg. 36, World Bank Publications, 2007, ISBN 0-8213-7225-4, ISBN 978-0-8213-7225-8
  6. ^ S 984 IS: International Pollution Deterrence Act of 1991 (Introduced in Senate) U.S. Congress Thomas online database, 102nd Congress, 1st session, 25 April 1991. Retrieved 2009-06-07
  7. ^ Leonard, Jeffrey H., 1988, Pollution and the Struggle for the World Product: Multinational Corporations, Environment, and International Comparative Advantage Pg. 69, Cambridge University Press, ISBN 0-521-34042-X, 9780521340427

Further reading

  • International Trade and Climate Change: Economic, Legal, and Institutional Perspectives, World Bank Publications, 2007, ISBN 0-8213-7225-4, ISBN 978-0-8213-7225-8, [2];
  • Mani, Muthukumara S., 1966, Environmental Tariffs on Polluting Imports: An Empirical Study, Environmental & Resource Economics, European Association of Environmental and Resource Economists, Volume 7 Issue 4 (June 1996), Pgs. 391-411;
  • Jean-Marie, Grether & Mathys, Nicole A. & Jaime, de Melo, 2006, Unraveling the World-Wide Pollution Haven Effect, Universite de Lausanne, Ecole des HEC, DEEP - Cahiers de Recherches Economiques du Département d'Econometrie et d'Economie politique (DEEP);
  • Robison, David H., 1988, Industrial Pollution Abatement: The Impact on Balance of Trad, Canadian Journal of Economics, Canadian Economics Association, Vol. 21, Pgs. 187-99, February;
  • Ghosh, S. & Yamarik, Steven 2006, Do Regional Trading Arrangements Harm the Environment?: An Analysis of 162 Countries in 1990, Applied Econometric and International Development, 2006 Vol. 6;
  • Naghavi, Alireza, Can R&D-Inducing Green Tariffs Replace International Environmental Regulations?; Fondazione Eni Enrico Mattei, 2006–92;
  • Tobey, James A, 1990, The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test, Kyklos, Blackwell Publishing, Vol. 43(2), Pgs. 191-209;
  • Baldwin, R E & Murray, Tracy, 1977, MFN Tariff Reductions and Developing Country Trade Benefits under the GSP, Economic Journal, Royal Economic Society, Vol. 87 (345), pages 30–46, March 1977
  • Hazilla, Michael & Kopp, Raymond J, 1990, Social Cost of Environmental Quality Regulations: A General Equilibrium Analysis, Journal of Political Economy, University of Chicago Press, Vol. 98(4), Pgs. 853-73, August 1990;
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