Unresolved Issues in WTO Law & climate change

Transcript:Unresolved Issues in WTO Law & climate change:
Unresolved Issues in WTO Law & climate change regulation Issues that may affect WTO-consistency of climate measures Environmental subsidies Processing and production methods Multilateral environmental agreements Technical barriers to trade Relationship between different WTO Agreements Emerging climate change policies Two types of WTO concerns: Subsidies Discrimination (MFN, NT) Four types of measures: cap-and-trade approach standards-based policies, which require the adoption of specific measures (eg labels) or set source-specific emissions limits carbon taxes border tax adjustments Environmental Subsidies What if we apply a tax on carbon footprints? As we analyze the legal issues below, consider whether differential tax rates based on different carbon footprints would be consistent with WTO subsidies law. Applicable WTO Agreements SCM Agreement applies cumulatively with GATT Articles VI and XVI. SCM Agreement does not preclude action ‘under other relevant provisions of GATT 1994, where appropriate’ (eg Art I:1 or III). Agricultural subsidies can raise issues under SCM Agreement or Agreement on Agriculture. TRIMS Agreement (incorporates some GATT) Order of analysis: AoA, SCM, then TRIMS/GATT. SCM Agreement Actionable & prohibited subsidies Subsidy financial contribution by govt or any public body w/in territory of Member benefit thereby conferred Prohibited (presumed specific) contingent on export: 3.1(a) contingent on use of domestic goods: 3.1(b) Actionable (if specific) multilateral action (WTO complaint) unilateral action (CVDs) Art 1.1(a)(1)(i) financial contribution A ‘government practice’ (covers all acts of governments or public bodies) involves a direct transfer of funds (financial resources and other financial claims, not just money) eg grants, loans, equity infusion potential direct transfers of funds or liabilities (does not depend upon the probability that a payment will subsequently occur) eg loan guarantees Does our carbon footprint tax qualify? Art 1.1(a)(1)(ii) financial contribution Govt revenue ‘otherwise due’ requires comparison of fiscal treatment of comparable income of taxpayers in similar situations a WTO Member is ‘free not to tax any particular categories of revenues’: US – FSC (AB) Foregone or not collected eg fiscal incentives such as tax credits Different income tax treatment for foreign & domestic sales (US – FSC) Exemption from duty on auto imports, conditional upon domestic production requirements (Canada – Autos) Does our carbon footprint tax qualify? Art 1.1(a)(1)(iii) financial contribution govt provides goods or services other than general infrastructure Stumpage fees (US – Softwood Lumber IV, AB) or purchases goods Not purchases of services (US — Large Civil Aircraft (2nd complaint), Panel) What if the government varies the cost