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March 30, 2008 / Mridul

Imposing Carbon Tariff On Chinese Goods Disastrous

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Unilateral decisions by Western countries to impose carbon tariffs on China could lead to disastrous consequences. According to a report published investment bank CIBC World Markets, US and Canada are considering carbon tax on Chinese made goods in an effort to force China to curtail its growing emissions. The report comes out amidst an EU warning to US and China to cut their carbon emissions.

“As the OECD countries begin to impose greater economic sacrifices on their own economies as part of decarbonization efforts, tolerance for the carbon practices of its trading partners, or more precisely the lack thereof, will diminish dramatically,” they write.

“Already Europe, which is well ahead of North America in terms of domestic carbon pricing, is talking about a carbon tariff that it can apply to imports from countries that don’t play by the same carbon rules.”

While the possible reaps of such a step could be beneficial for the environment there is no doubt that it would generate a diplomatic tornado too. Although China is the largest emitter in the world still its per capita emissions are lower than most industrialized nations and Chinese officials won’t miss this point when they challenge any attempts of imposing taxes on their exports.

Before US (and other industrialized nations) talk of taxing Chinese goods it should take steps to curb emissions at home. The Bush Administration doesn’t seem to be much serious in its efforts to control the emissions. Recently EPA issued new sets of standards for ozone however, these standards were weakened as President Bush once again ignored the advice from scientists. After intervention from Vice President Cheney, EPA rejected California’s proposal to introduce tougher vehicular emissions standards.

Now if US cannot clean up its own act it has no right to ask others to do so. The intention behind such a proposal is no doubt benignant but the very foundations of US’ arguments aren’t that strong given what’s going on back home. Instead of directly imposing taxes on the Chinese goods, the US government (and others) should encourage its citizens to buy goods from countries with cleaner track record as far as emissions go.

Instead of slapping taxes, the government should make it mandatory for the manufacturing company to disclose the amount of emissions produced in the production of every article, a practice very well taken up by chocolate giant Cadbury. This would give the power to the common people and the consumer sentiment towards Chinese-made products is well known. Hence in order to avoid any diplomatic row the Western governments should avoid taking any direct step on this issue.

“This issue would be politically very divisive, you’d create a lot of political problems if certain groups of countries were to take these actions”, Pachauri told journalists at the European Parliament.

Pachuri rightly points out that any ‘misadventure’ regarding this issue would open yet another front in our fight against Climate change – the political one.

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