Bridges Trade BioRes • Volume 5 • Number 5 • 18th March 2005

Europe to Adjust Border Prices in Trade with Non-Kyoto Countries?

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Caroline Lucas, a Member of the European Parliament (MEP), recently raised the issue of adjustment measures at the border to protect European companies — which face costs related to climate change abatement under the Kyoto Protocol — from unfair competition from companies in non-Kyoto countries such as the US, which “are avoiding these costs at the expense of the global environment”. Lucas suggested that the European Commission raise the issue at the WTO, since the advantage enjoyed by companies in countries outside the Kyoto regime could be considered a subsidy which “could be subject to redress in the form of countervailing duties or border tax adjustments” under WTO rules. The European Commission recently outlined its strategy beyond 2012, when the first commitment period of the Kyoto Protocol ends (see BRIDGES Trade BioRes, 18 February 2005). The strategy includes enticing countries currently outside the Kyoto Protocol to come on board.

Responding to Lucas on 9 March, the European Commission said, however, that it had no plans of raising the issue at the WTO, as it “does not expect any major negative competitiveness impacts from EU climate policies”. The Commission also noted that in its future climate strategy, it would seek to incentives through constructive dialogue, to encourage non-Parties to participate in the next steps of the climate regime.

Question posed by MEP Caroline Lucas to the European Commission.

European Commission response.

“Mandelson Rejects MEPs Call For US Kyoto Tax,” NEWS RELEASE FROM C. LUCAS, 9 March 2005.