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GTAP Resources: Resource Display

GTAP Resource #6075

"Optimal Environmental Border Adjustments Under the General Agreement on Tariffs and Trade"
by Balistreri, Edward J., Daniel Kaffine and Hidemichi Yonezawa


Abstract
A country choosing to adopt border carbon adjustments based on embodied emissions is motivated by both environmental and strategic incentives. We argue that the strategic component is inconsistent with commitments under the General Agreement on Tari s and Trade (GATT). We extend the theory of border adjustments to neutralize the strategic incentive, and consider the remaining environmental incentive in a simpli ed structure. The theory supports border adjustments on carbon content that are below the domestic carbon price, because price signals sent through border adjustments inadvertently encourage consumption of emissions intensive goods in unregulated regions. The theoretic intuition is supported in our applied numeric simulations. Countries imposing border adjustments at the domestic carbon price will be extracting rents from unregulated regions at the expense of ecient environmental policy and consistency with international trade law.


Resource Details (Export Citation) GTAP Keywords
Category: 2020 Conference Paper
Status: Published
By/In: Presented during the 23rd Annual Conference on Global Economic Analysis (Virtual Conference); Environmental and Resource Economics
Date: 2020
Version: 2019 April version
Created: Yonezawa, H. (4/15/2020)
Updated: Yonezawa, H. (6/19/2020)
Visits: 339
- Climate change policy
- Trade and the environment
- Multilateral trade negotiations
- Not Applicable


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