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  • UN Admits Cap and Trade is Harmful: Congress Should Discuss Border Tax Adjustments

    A paper released today by the United Nations Environment Program and the World Trade Organization acknowledged that cap and trade legislation would be expected to have significantly harmful economic consequences, likely including a serious loss of international competitiveness. In response, governments considering such a policy would likely want to consider a border tax adjustment (BTA) system to mitigate the loss of competitiveness. The report goes on to say that such a BTA system would be permissible under the world trading system.

    While it’s shocking in and of itself that a group like the UN Environmental Program is admitting that cap and trade is economically harmful, the report raises a good point concerning the BTA system that should be addressed by Congress.

    A BTA system allows a tax to be levied on imports and an export rebate to be given on exports to reflect the influence of a tax on the relative prices in the domestic economy. Most countries with Value-Added Taxes (VAT), such as those found in Europe, employ BTA systems to prevent the VAT from putting their countries at a competitive disadvantage at home or abroad. Page 22 of the report states:

    A number of WTO rules may be relevant to carbon taxes and cap-and-trade systems and related border measures, including core trade disciplines, such as the non discrimination principle. The provisions of the Agreement on Subsidies and Countervailing Measures SCM) may also be relevant to emission trading schemes for instance if allowances are allocated free of charge.

    Moreover, detailed rules on border tax adjustments (BTAs) exist in the General Agreement on Tariff s and Trade (GATT) and the WTO SCM Agreement. These rules permit, under certain conditions, the use of BTAs on imported and exported products. Indeed, border adjustments on internal taxes are a commonly used measure with respect to domestic indirect taxes on the sale and consumption of goods, such as cigarettes or alcohol. The objective of a border tax adjustment is to level the playing field between taxed domestic industries and untaxed foreign competition by ensuring that internal taxes on products are trade neutral.”

    The release of this report is a stunning development for two very important reasons:

    1) It acknowledges de facto that cap and trade has harmful economic consequences. Again, this is co-written with the UN Environment Program, an adamant supporter of emission reduction targets, a firm believer in the IPCC report and that manmade emissions are significantly contributing to global warming and a firm believer that all nations, especially the developed ones should be “combating global warming.” If cap and trade is a jobs program, as President Obama and certain policymakers purport it to be, why are the harmful consequences on net so extensive that a country would need to offset their anti-competitive effects?

    2) It raises a major new consideration that has previously escaped domestic debate. The House of Representatives is currently debating a massive, 1,200 page cap and trade bill on the floor. Whether one supports or opposes the bill, all participants in the debate have an interest in addressing this important new dimension of the debate. Before debating an incomplete bill, the House should consider whether a BTA regime is needed, and if so, task the appropriate Committees with its design. Legislators should seriously address this new development before debate concludes.

    Posted in Energy [slideshow_deploy]

    10 Responses to UN Admits Cap and Trade is Harmful: Congress Should Discuss Border Tax Adjustments

    1. Cathy Amelio, New Je says:

      Citizens should note who votes yes on this bill and either have them impeached or let them know that you will work hard to get them out of office. Rep Tim Walz of Minnesota is voting yes and I bet has no idea what he is voting on or was promised something! This bill is a money maker for one person and that is Al Gore. Ask your legislator how are the people going to afford this bill!

    2. Pingback: UN Admits Cap and Trade is Harmful: Congress Should Discuss Border Tax Adjustments » The Foundry « Eastaustinvoice’s Weblog

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    5. Pingback: silent E speaks » Blog Archive » Well This Doesn’t Happen Too Often……

    6. mark elder Texarkana says:

      It is a sad day and a cold day in hell when the U.N says one thing that makes more since than the garbage and refuse that is coming out of washington. America has passed a mile stone when the U.N is showing one sign of being further right than American stupidity.

      I have hreard all of my life about American exceptionalism but now do we have to lead the charge in outstanding stupidity?

      I am depressed!

    7. Pingback: Dirty Democrats » UN Admits Cap and Trade is Harmful: Congress Should Discuss Border Tax Adjustments

    8. Kirk Rodrigue says:

      I live in Louisiana an one of my Senators (Senator Landrieu) said on WRNO Radio 99.5 New Orleans that she was keeping an open mind on Cap and Trade. Senator Landrieu is keeping an open mind on a tax that will kill the number one industry in Louisiana (Oil Industry). Washington is out of control and no one is listening to the people. If Senator landrieu vote for this bill I will personally start a recall for her sit the very next day.

    9. Erik Andersen; Gabri says:

      It seems that the issue of human responsibility for climate change is a settled matter and that the only way to address the resulting problem is by introducing a punitive taxation program. Personally I do not accept the notion that human activity has wrought the scale of changes in climate as proponents want us to accept. There seems to be a lot of guilt being passed around to generate support of a new scheme of taxation.

      Every time we humans devise a new scheme we create a new opportunity for the "gamers" to feed off and this cap and trade is no different. This program does nothing I can see to improve the economic condition for anyone other than the paracites. It can be characterized as a "zero sum" game where financial resources are taken indirectly from the many and given to the few.

      THere are many incentives available to effect a reduction in polutions of all types and they should be our only focus.

    10. wciappetta Florida says:

      No matter what lense the subject is viewed from, the cost to the Citizens of the US are beyond burdensome….Cap and trade should never see light of day

      Also in light of unspoken undertone of Nafta, when we discuss BTA's [value added tax] we are really venturing under the radar into a Customs Union with its common external tariff.Seems like a further consolidation of the North American Union objective….

      Whatever border trade policy we enter into, the other Nafta countries would also have to agree and adopt… you are watching the hatching of a plan and the international objective is being buried in a domestic argument.


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