Can trade restrictions be justified on environmental grounds?
CARBON markets look green around the gills. The price of carbon on Europe’s emissions-trading system, the world’s biggest, has slumped. Barack Obama’s hope of getting a cap-and-trade proposal through Congress seems as distant as ever. There is no sign of action in places like India and Brazil. But it is easy to forget how far carbon markets have come. They exist or are on their way in Europe, Australia, California, China and South Korea. One day, carbon prices will vary greatly between countries.
When they do, those with higher carbon prices will be at a competitive disadvantage because the cost of emitting carbon will be embodied in the overall price of goods, raising them relative to goods produced in countries with no or low carbon prices. A new study* by Aaditya Mattoo of the World Bank and Arvind Subramanian of the Centre for Global Development, a think-tank in Washington, DC, looks at how big this disadvantage might be.
See full Article: http://www.economist.com/news/finance-and-economics/21572180-can-trade-restrictions-be-justified-environmental-grounds-air-trade
Posts
