Abstract
Trade restrictions in the form of eco-tariffs have so far not become policy instruments for the protection of global environmental commons. However, other trade instruments addressing PPMs have been introduced in the context of the protection of the ozone layer, codified in the Montreal Protocol on Substances that Deplete the Ozone Layer. Furthermore, they figure in policy proposals addressing global warming.
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A third environmental problem with the global dimension is the reduction of biodiversity. However, since the protection of biodiversity calls for trade measures which mainly address trade in the products, i.e. rare organisms, rather than PPMs, protection of biodiversity is not considered here. For a survey of the problem and international action taken pursuant to its solution see Boyle [1994] and Brown et al. [1993]. For trade policy in the context of biodiversity see Burgess [1994].
See Molina & Rowland [1974].
When such ozone-depleting substances are released into the atmosphere, they slowly migrate up until they reach the ozone rich stratosphere. In this altitude (10 to 50 km above sea level) solar radiation is sufficiently powerful to break up the otherwise stable CFC or halon compounds. The chlorine or bromine atoms thus released trigger a chain reaction that leads to the destruction of ozone molecules. For a detailed discussion of ozone chemistry see Parson [1993].
It induces for example skin cancer, cataracts and a suppression of the human immune system. In addition, both the aquatic food chain and crop yields may be seriously harmed by higher than normal levels of UV-B radiation. For further details see UNEP [1989] and World Bank [1992].
For developing countries which are Parties to the Protocol, the Parties established a Multilateral Fund in 1990 to provide financial and technical assistance for the elimination of production and consumption of ozone-depleting substances (see Twum-Barima & Campbell [1994, 43]).
For the full text of the Montreal Protocol see Ozone Secretariat [1993].
See www.unep.ch/ozone.
See Cline [1991] and Solow [1991].
The most important natural GHGs are water vapour (H2O), carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
See Houghton et al [1990].
The rest is due to natural exchange with the oceans, soils and plants.
In order to summarise the results of world-wide research and to agree upon a working hypothesis on the magnitude of the threat, an Intergovernmental Panel on Climate Change (IPPC) was established in 1988. IPPC’s mean prediction for the increase of the average temperature on the earth’s surface due to emissions of GHGs is 0.3°C per decade over the next century. The mean predicted sea level rise is 6 cm per decade. Land surfaces will warm more rapidly than the seas, and there will certainly be regional differences in climate change. For example, it is expected that Southern Europe and North Africa will warm more rapidly than average. However, all mean predictions from individual global climate models have a substantial variance and the range of predictions from different models also varies widely (see Houghton et al. [1990]).
Most studies focus primarily on the increase in mean global temperature but there is reason to believe that the temperature rise is not the most threatening issue. Change in the distribution of rainfall and an increase in droughts or freezes as well as climatic catastrophes which are expected to result from global warming are likely to be much more important (see Pulvenis [1994, 74]). We should thus interpret the estimates of mean temperature rise as an index for the climate changes associated with other important variables.
See Cline [1991].
See Pulvenis [1994, 75].
See www.cop4.org; for the full text of the Framework Convention see Sands et al. [1994, 249–270].
See www.cop4.org.
See UN Framework Convention on Climate Change [1997].
A further highlight of the meeting in Buenos Aires was the signing of the Kyoto Protocol by the U. S. which previously had taken a very low profile in the combat of climate change (see www.cop4.org).
Scientific results regarding the magnitude of climate change effects are still vague (see Boisson de Chazournes [1995, 2]).
See Boisson de Chazournes [1995, 5]. It is not entirely clear whether energy prices would rise as a result of measures to counteract global warming: while prices — including taxes -will most likely rise in countries where environmental control measures such as carbon taxes would be introduced, the world market price is likely to decline as a result of the demand reduction. It is thus possible — yet somewhat unlikely — that energy prices may in fact not rise.
Trade in these substances is banned between Parties and non-parties (see Ozone Secretariat [1993]).
Trade restrictions apply to certain products containing controlled ozone-depleting substances; they are obligatory against non-parties if Parties agree to a list specifying these products (see Ozone Secretariat [1993]).
The Protocol provides that Parties should determine the feasibility of restricting or banning imports from non-parties of goods produced with ozone-depleting substances; see footnote 25 below.
Export to non-parties of products, equipment or technology that would facilitate the production of ozone-depleting substances is discouraged (see Ozone Secretariat [1993]).
The text of the Montreal Protocol Art. 4.4 reads: “Within five years of the date of entry into force of this Protocol, the Parties shall determine the feasibility of banning or restricting, from States not party to this Protocol, the import of products produced with, but not containing, controlled substances. If determined feasible, the Parties shall &. elaborate in an annex a list of such products. Parties that have not objected to it& shall ban or restrict, within one year of the annex having become effective, the import of those products from any State not party to this Protocol” (Ozone Secretariat [1993]).
The fact that a quantitative restriction rather than a tariff has been chosen is related to the domestic control scheme of ozone-depleting substances by means of quantitative ceilings rather than taxes for production and consumption (see Enders & Porges [1992, 134] and Twum-Barima & Campbell [1994, 68/69] on the discussion of taxes vs. quantitative restrictions for ozone-depleting substances).
Each of these accounted for 30% of consumption of ozone-depleting substances at the time according to Enders & Porges [1992, 132].
See Slooten [1994, 88].
This was accompanied by a positive incentive to join the Montreal Protocol, particularly for developing countries, in form of the Multilateral Fund (see footnote 5 above).
See Benedick [1991, 91] and Twum-Barima & Campbell [1994, 51/2].
See Lang [1993, 365] and Slooten [1994, 88].
Other factors like scientific assessment stressing the urgency of measures to halt the depletion of the ozone layer, and rapid technical progress with substitutes for ozone-depleting substances also contributed to the widespread participation (Slooten [1994, 88/89] and Twum-Barima & Campbell [1994, 100]).
The PPM-based trade restrictions in the Montreal Protocol are thus ex-ante restrictions — as supposed to ex-post sanctions — in the terminology of Kirchgässner & Mohr [1995, 7] since they were only provided but not exercised.
The threat was only too credible since it was actually hammered out in the Protocol. The extent of the threat has been considered significant by Enders & Porges [1992, 138]: “& judging by current trade statistics, a possible ban on imports of products produced with but not containing CFCs would have a much broader impact on exports of non-parties to Parties&.”.
Sands et al. [1994].
For the full text of the Rio Declaration see Sands et al. [1994, 189–228].
Sands et al. [1994].
Boisson de Chazournes [1995, 11].
See Boisson de Chazournes [1995, 12/13]; Bhagwati [1993a, 49] states for example that “& trade sanctions would seem to be acceptable as an option against non-signatories to a multilateral agreement [to combat climate change], provided that this agreement was successfully argued to be both efficient and equitable”. Similarly Barrett [1994a, 1] who argues that trade restrictions should be part of an (enhanced) climate change agreement to avoid leakage and induce participation in the agreement if certain rules are drawn to preclude that such trade measures serve protectionist intents.
The proposal also included a tax on nuclear energy to avoid favouring nuclear energy over fossil fuel combustion in energy generation (see Barrett [1994a, 13]).
Reason for these provisions was to safeguard competitiveness of Community economies and to avoid pronounced economic losses for specific sectors (steel, chemicals, non-ferrous metals, cement, glass and pulp and paper); see Barrett [1994a, 13].
See Barrett [1994a, 14] and Pearson & Smith [1991, 22].
See Stewardson [1994, 94] and Esty [1994, 161].
See Stewardson [1994, 97].
Nevertheless, most countries that have already imposed carbon taxes provide tax exemptions or reductions for energy-intensive industries (e.g. Denmark, Finland, Norway, Sweden; see Barrett [1994a, 14]).
See Barker [1993, 251].
See chapter 7.
Pearson & Smith [1991, 25]; similar suggestion has been made by Düerkop [1994, 831]. These proposals are supported by results found by Hœl [1993].
Benedick [1991, 91] for example states. “At the first session in Geneva 1986, the United States offered specific proposals to restrict trade in controlled substances with nonparties. The objective of such restrictions was to stimulate as many nations as possible to participate in the protocol, by preventing non-participating countries from enjoying competitive advantages and by discouraging the movement of CFC production facilities to such countries. These provisions were critical, since they constituted the only enforcement mechanisms in the protocol.”
Barrett [1994a, 4] cites the United States Environmental Protection Agency in this context: “In 1978 the United States restricted the use of CFCs in aerosols. While several nations adopted similar restrictions & and others cut back their use & there was no widespread movement to follow the United States’ lead. Concerns existed then that other nations had failed to act because the United States & were making the reductions thought necessary to protect the ozone layer”
It was feared in particular that a multilateral non-compliance scheme with trade measures based on PPMs would be established (see Boisson de Chazournes [1995, 11]).
The ‘clean development mechanism’ facilitates emission abatement for countries that agreed to reduce GHGs (all OECD countries and most of the Economies in Transition). Within the framework of the ‘clean development mechanism’ emission trading schemes will be established to increase the efficiency of world-wide reduction of GHGs (
Compare Markandya [1991, 72].
Commentators disagree about which of the two functions was predominant; Twum-Bamima & Campbell [1994, 51/52] consider the avoidance of leakage the most important: “The primary impetus behind negotiating a multilateral agreement to protect the ozone layer was the recognition that if individual countries or even regional or economic groups took action rather than reaching global agreement, an increase in the production of ozone-depleting chemicals in non-participating countries could negate the environmental benefits of actions by a limited number of countries. ”
GATT [1992, 25]: “& the Parties to the Montreal Protocol&. could have structured the Protocol in such a way that it reduced consumption of CFCs in the participating countries by the target amount, without the necessity of including provisions for special restrictions on trade with non-parties. Since, however, the drafters had other goals as well, including that of providing compensation to CFC producers in the participating countries (by allowing them to receive extra profits from selling the diminishing quantity of CFCs), trade provisions which discriminate against non-participants were included in the Protocol.” Also Benedick [1991, 91]: “The objective of such [trade] restrictions was to stimulate as many nations as possible to participate in the protocol, by preventing non-participating countries from enjoying competitive advantages&” See also Oberthür [1992a] who analyses the role of producer interest in shaping other provisions of the Montreal Protocol.
Stewardson [1994, 93] attributes these exemptions to the working of lobby groups.
The reason for the fact that the tax is not only levied on CO2 but also on nuclear energy is not to confer competitive advantages to those members of the EU who rely more heavily on nuclear energy (see Commission of the European Communities [1991, 8/9] cited in Barrett [1994a, 12]. Furthermore, the conditionality of the tax on other OECD countries undertaking similar measures was also driven by competitiveness considerations: “Whereas, in order to safeguard the competitiveness of Community industry, the tax arrangement cannot be applied in the Member States until such time as other member countries of the OECD have brought in a similar tax or measures having an equivalent fiscal impact” (Commission of the European Communities [1991, 8], cited in Barrett [1994a, 13]).
This view is shared by Stewardson [1994, 93].
See Esty [1994, 161] and Stewardson [1994, 93].
See WTO [1996b, §8].
Some argue for a different concept with regard to PPMs that pollute the global environmental commons. Pearce [1993, 24] proposes to define products as ‘unlike’ if they have different pollution impacts. Arden-Clarke [1993, 76] also argues that discrimination between products on the basis of PPM pollution should be allowed to further protection of the global commons.
The following provides a brief background on the Tuna Panel Rulings: The U.S. Marine Mammal Protection Act requires the U.S. government to take steps to curtail the incidental killing of marine mammals by commercial fishermen (the Marine Mammal Protection Act instructs the secretary of commerce to prohibit the importation of tuna products from countries whose dolphin kill ratio, i.e. dolphin death per net dropped, exceeds that of U.S. fishermen beyond a certain margin; see Esty [1994, 268]). In 1988, an environmental group went to court to enforce the congressional mandate on the basis that dolphins in the Eastern Tropical Pacific Ocean were being killed by foreign fishermen in violation of the law. A federal judge agreed that the government was failing to uphold the law and ordered Mexican tuna imports to be banned from the United States. Mexico saw its right to sell tuna in the United States violated and asked for a GATT dispute settlement Panel to adjudicate the matter (see Esty [1994, 268]).
Compare last chapter; these Panel findings (for a summary see Esty [1994, 268/269]), however, have not been adopted by the GATT Council. Since Mexico did not pursue its GATT victory in the first tuna case to ratification by the GATT Council, the European Community brought its own complaint against the U.S. Marine Mammal Protection Act before GATT in 1992. The second case raised similar questions as the first about the right of a nation to impose environmental trade measures unilaterally and extrajurisdictionally. The second Dispute Settlement Panel Report came to essentially the same conclusion as the first (for a summary see Petersmann [1995, 122/123]). It has not yet been adopted by the GATT Council either.
See for example Trebilcock & Howse [1995, 347pp] and French [1993b, 14]. Yet it should be kept in mind that the Panel was never adopted.
See Düerkop [1994, 838].
Extracts from Principle 2 of the Rio Declaration (cited after Petersmann [1993a, 46]) and Chapter 17 of Agenda 21 (cited after Petersmann [1993a, 50]); compare also Düerkop [1994, 838] who argues that “categories of ‘extrajurisdiction’ do not apply in limiting protective trade measures [adressing global pollution], bearing in mind the results of investigations into global interactions between different environmental factors in the last decade.”
See Sorsa [1992, 123].
The argument is often advanced; see for example Eglin [1993] and GATT [1992].
WTO [1996a, § 17].
WTO [1996a, § 25]; in this context, the CTE also made a reference to Principle 12 of the Rio Conference (see above) which discourages unilateral trade measures pursuant to the protection of global environmental commons.
WTO [1996a, § 15]; this approach has been described as creating an environmental window in the WTO. If such a tack were pursued, GATT/WTO would follow the example of the NAFTA Side Agreement on Environmental Cooperation; see Thomas & Tereposky [1993a] and Schulz [1994].
WTO [1996a, § 12]; since the GATT-waiver is limited in its time scope, the CTE also considered amending Article IX to provide a multi-year waiver for multilateral environmental agreements (WTO [1996a, § 13]).
WTO [1996a, § 15].
This claim has been made inter alia by the OECD: “Harmonisation of on-product related PPM requirements &.. may be necessary and desirable to address trans boundary and global environmental concerns.” (OECD [1995b, 30]; see also Boisson de Chazournes [1995, 15] and French [1993a, 36]).
Robertson [1992, 310]; see also chapter 7 where we drew attention to the fact that negative incentives such as sanctions may be poor instruments to induce voluntary cooperation. 77 Hansson [1990, 116].
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Kraus, C. (2000). Eco-tariffs and Global Environmental Policy. In: Import Tariffs as Environmental Policy Instruments. Economy & Environment, vol 19. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-9614-5_13
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