Thursday, April 19, 2012

EU ETS - Protectionism in the High Skies?

Some more on EU ETS:

brief informative study titled "EU ETS and Aviation" for the Members of Parliament of U.K. on EU ETS and its impact makes interesting reading. It narrated the history of the scheme as well as its implementation mechanism. Reports of Airlines deciding to fall in line with the EU ETS directive have been reported. On the other hand, aviation industry also has asked for a roll back.

A well argued piece in Project Syndicate by Jean Pisani-Ferry titled "Sky-High Protectionism?" captures the essence of the dispute rather well. While discussing the various arguments for and against the EU ETS, he concludes:
"The really important argument against Europe’s decision is the one about hidden agendas. The EU’s trade partners do not want to give ground, because they suspect that in the coming years, climate change will serve as a pretext for protectionist policies. Indeed, climate change is in many ways the perfect crutch that opponents of open trade have long sought, and there is a real risk that it will be used in a mischievous way.
So caution is fully justified. But the problems arising from the incoherence of national climate policies are real. They emerge as soon as domestic emissions are taxed in some part of the world (or, equivalently, as soon as quotas are imposed), because domestic producers then claim that they are at a disadvantage in international trade.
Moreover, rejecting Europe’s arguments out of hand, owing to a suspected protectionist agenda, is not without risk. If the controversy comes to be perceived by the European public as a conflict between free trade and the environment, free trade is likely to lose.
Europe’s partners should not assume that trade automatically takes precedence over climate concerns. Instead, they should focus public attention on valid arguments. For example, it is much easier for advanced countries to reduce emissions without any effort, simply by outsourcing the production of emission-intensive goods to emerging and developing countries. In this way, they can meet strict targets without reducing the carbon content of their consumption.
The trade vs. climate debate is fundamental for the global economy. Europe’s air-transport tax provides an opportunity to launch it in a concrete and rational way. It is an opportunity that should not be missed."
Is the EU ETS a protectionist tool, a technical barrier to trade which restricts international trade? Does it symbolise the environment-trade dichotomy? Is it a developed world-developing world dispute? Are concerns of climate change inapplicable to international trade rules, to be fought and chalked out in different fora? Does the EU ETS throw open the flood gates for more intrusive, non-trade related standards to be imposed by the developed world to restrict international trade - labour, human rights, etc.? Is there a middlepath?

No comments: