Environmental Tariffs: Will They Be Captured by Protectionists?

Environmental tariffs appear to be a politically necessary part of the climate change policies that are emerging in many countries. The appeal of level playing field arguments is seductive and difficult to dispute. Environmental policy makers, however, may be naïve, because they fail to account for the potential of trade policy mechanisms and institutions to be captured by traditional vested interests seeking economic protection. The exact structures and institutional frameworks for environmental tariffs are often left vague by environmental policy makers, making them easy targets for protectionists. Environmental tariffs appear to be particularly vulnerable to capture given the complexity of production and the embryonic stage of the science of measuring carbon intensity. The article outlines the threats to the international trading system posed by environmental tariffs and suggests cooperation between those responsible for developing environmental policy and those responsible for developing trade policy.