An eco-tariff, also known as an environmental tariff, is a

trade barrier Trade barriers are government-induced restrictions on international trade. According to the comparative advantage, theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most ...

for the purpose of reducing pollution and improving the environment. These trade barriers may take the form of

import An importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...

or export taxes on products that have a large

carbon footprint A carbon footprint (or greenhouse gas footprint) is a calculated value or index that makes it possible to compare the total amount of greenhouse gases that an activity, product, company or country Greenhouse gas emissions, adds to the atmospher ...

or are imported from countries with lax environmental regulations.Kraus, Christiane (2000), ''Import Tariffs as Environmental Policy Instruments'', Springer, , A carbon tariff is a type of eco-tariff.

International trade vs. environmental degradation

There is debate on the role that increased

international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (See: World economy.) In most countries, such trade represents a significan ...

has played in increasing pollution. While some maintain that increases in pollution which result in both local

environmental degradation Environment most often refers to: __NOTOC__ * Natural environment, referring respectively to all living and non-living things occurring naturally and the physical and biological factors along with their chemical interactions that affect an organism ...

and a global

tragedy of the commons The tragedy of the commons is the concept that, if many people enjoy unfettered access to a finite, valuable resource, such as a pasture, they will tend to overuse it and may end up destroying its value altogether. Even if some users exercised vo ...

are intimately linked to increases in international trade, others have argued that as citizens become more affluent they'll also advocate for cleaner environments. According to a

World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...

paper:

Since freer trade raises income, it directly contributes to increasing pollution levels via the scale effect. However, it thereby induces the composition (and) technique effects of increased income, both of which tend to reduce pollution levels.''Trade, Global Policy, and the Environment'', Pg. 56, Fredriksson, World Bank, World Bank Publications, 1999, , Dean, Judith M & Lovely, Mary E (2008), ''Trade Growth, Production Fragmentation, and China's Environment'', Pgs. 3 & 5, National Bureau of Economic Research, Working Paper 13860, Cambridge, MA.

Proponents of environmental tariff implementation have highlighted that if implemented correctly, the tariff could serve to stop strategic behavior of foreign nations and return efficient economic policy in the foreign country. Additionally, environmental standards will be harmonized between the trading nations as a result of the environmental tariff. One of the major issues that are raised when discussing environmental tariffs, is the issue of a reduction in trade. The argument raised is that tariffs reduce trade and may not actually be targeting the actual source of the pollution. They argue that pollution is not just as a result of imported goods but a large part of pollution suffered occurs within the borders of a country, therefore trade would merely harming trade without actually addressing the root cause effectively.

Early tariff implementation proposal

Although the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

has in the past been accused of dragging its feet on implementing tough new anti-pollution measures, it was the originator of a legislative proposal suggesting an environmental tariff be applied against exporting countries whose exports gained significant cost advantages due to less stringent environmental regulations. The proposed legislation was tabled as the International Pollution Deterrence Act of 1991 and was introduced in its Senate in April of that year.''International Trade and Climate Change: Economic, Legal, and Institutional Perspectives'' Pg. 36, World Bank Publications, 2007, ,

Doha Ministerial Declaration

Negotiations took place in 2001

Doha Doha ( ) is the capital city and main financial hub of Qatar. Located on the Persian Gulf coast in the east of the country, north of Al Wakrah and south of Al Khor (city), Al Khor and Lusail, it is home to most of the country's population. It ...

, Qatar, towards the improvement of work related issues concerning the implementation of present agreements. This was a mandated conference dubbed the Fourth Ministerial Conference. One of the issues discussed concerned the issues of trade barriers on environmental goods and services. The result of which was ministers agreeing to a reduction or complete removal of tariff and non-tariff barriers to environmental goods and services such as catalytic converters and air filters to name a few.

Proposed International Pollution Control Index

A notable feature of the proposed U.S. ''International Pollution Deterrence Act'' was the international pollution control index it cited within its Section 5, which read:S 984 IS: International Pollution Deterrence Act of 1991 (Introduced in Senate)
U.S. Congress Thomas online database, 102nd Congress, 1st session, 25 April 1991. Retrieved 2009-06-07

INTERNATIONAL POLLUTION CONTROL INDEX

Section 8002 of the Solid Waste Disposal Act (42 U.S.C. 6982) is amended by adding the following new subsections at the end thereof: `(t) The Administrator shall prepare, within one hundred and twenty days of the enactment of this section and yearly thereafter, a pollution control index for each of the top fifty countries identified by the Office of Trade and Investment of the Department of Commerce based on the value of exports to the United States from that country's attainment of pollution control standards in the areas of air, water, hazardous waste and solid waste as compared to the United States. The purpose of this index is to measure the level of compliance within each country with standards comparable to or greater than those in the United States. The Administrator shall analyze, in particular, the level of technology employed and actual costs incurred for pollution control in the major export sectors of each country in formulating the index.

Carbon tariff

Criticism

Environmental tariffs may result in the movement in production of goods to areas in which stricter environmental standards are enforced. Environment tariffs were not implemented in the past, in part, because they were not sanctioned by multilateral trade regimes such as the

World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...

(WTO) and within the

General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its p ...

(GATT), a fact which generated considerable criticism and calls for reform. Moreover, the GATT does condone the use of tariffs as market interventions, so long as the interventions do not discriminate products, both foreign and domestic. A disputed case relating to this policy was brought forth to the GATT/WTO, involving the U.S. and Canada over Canadian environmental regulations on beverage containers. Additionally, many foreign factory owners in

newly industrialized countries The category of newly industrialized country (NIC), newly industrialized economy (NIE) or middle-income country is a socioeconomic classification applied to several countries around the world by political scientists and economists. They represent ...

and underdeveloped countries saw the attempts to impose pollution controls on them as suspicious... : "...seeing it as a threat to their growth and fearing that developed countries would attempt to export their preferences for pollution control or to place 'environmental' tariffs on imports from countries with lower standards."Leonard, Jeffrey H., 1988, ''Pollution and the Struggle for the World Product: Multinational Corporations, Environment, and International Comparative Advantage'' Pg. 69, Cambridge University Press, , 9780521340427 Moreover, the problem of what the ideal tariff level is also a cause for concern when implementing environmental tariffs. Further implementation problems have been as a result of what some developing nations may view as green protectionism. Green protectionism is the use of methods meant to address legitimate environment goals for the end goal of protection of domestic industry.

International trade vs. environmental degradation

Early tariff implementation proposal

Doha Ministerial Declaration

Proposed International Pollution Control Index

Carbon tariff

Criticism

See also

References

Further reading