Tariff policies in climate change mitigation

Recently, a number of proposals to introduce BTA measures in various national and regional carbon taxation and emissions trading systems were put on the table on a governmental level.

However, the introduction of climate policy-related BTA measures has been deemed quite problematic both from economic, legal and political perspectives.

Another approach is to revert to the tariff policy. Tariffs are a lawful instrument of protection under the WTO law, creating opportunities for unilateral deconsolidation with a compensation, which can take the form of lowering tariffs on equivalent products with a greener profile. A number of technical and procedural obstacles must be overcome.

For some of the products concerned, there is no appropriate code under the Harmonised System Codes (HS Code). In very few cases visual inspection might suffice to identify a relatively efficient good. But generally a “greener” product can only be identified using test procedures, product categories and efficiency metrics, which often differ by country. For energy-efficient goods to be included in tariff reduction or tariff-elimination initiatives, there would have to be an agreement on a standard set of product descriptions, reference testing standards and efficiency thresholds, etc.

A number of questions arise, including the following: Should we use tariffs to achieve a level playing in climate mitigation? Should tariffs be deconsolidated and imposed on the basis of CO₂ emission standards of products, and PPMs? How may sectoral increases be compensated?