The European Union (EU) is considering border tariffs on imports from more polluting countries, but an initial assessment shows such levies could spark trade wars, draft reports show.
Two European Commission reports do not explicitly reject a push for border tariffs by France and Italy, but say they would be fiendishly complex to calculate, create a huge administrative burden and risk trade conflict.
“Border measures risk clashing with the obligations under the World Trade Organisation (WTO),” said one study looking at the cost of increasing EU curbs on climate-warming emissions.
France and Italy are worried that their industries, which pay for EU permits to emit carbon dioxide, will lose out to cheaper imports from countries that impose no such charges.
The Commission said it would continue to look at how imports might be included in the Emissions Trading Scheme, the EU’s carbon market and its main tool against climate-warming emissions. But the prospect of such measures looks dim.
“The introduction of border measures may also trigger retaliatory measures and even hinder international negotiations,” added the document, seen by Reuters. “The system could at best only be envisaged for a very limited number of standardised commodities, such as steel or cement.”
Sanjeev Kumar at environmental think-tank E3G said: “This is pretty much the death of the border-tax adjustment discussions in Europe. We’ve known for a long time it would put the whole European economy at risk.”