Publication

This paper discusses how international trade and the preservation of the environment can intersect in the case of carbon taxes. As the paper's author explains, carbon taxes become relevant in the case of cross-border trade when they are coupled with border tax adjustment (BTA) legislation for imported goods. (BTAs are intended to level the playing field between domestic and foreign products, but such tax schemes, if not designed properly, can be found to violate a country’s international commitments before the WTO.) Given these intersections, the paper's author concludes that environmentally conscious governments can impose a WTO-compatible BTA to offset domestic CO2 legislation, and that federal governments need to engage in coordinated efforts to harmonize the treatment of high CO2 emitters domestically, since domestic industries will not bear the burden of environmental regulation alone.