January 07, 2008
Smart tariffs can help towards goal of lower emissions
Letter to the Editor, Financial Times, January 7, 2008.
Sir,
You argue against imposing any form of carbon border tariffs by invoking "slippery slope" reasoning ("The greening of globalisation", editorial, January 4): such tariffs, you say, could result in tit-for-tat restrictions. Possible, but most reactionary tariffs would and probably should be struck down by the World Trade Organisation. Yet the WTO would likely allow carbon tariffs combined with domestic caps or taxes, for good reasons. They provide a unilateral solution to an inherently global and complex problem without violating trade rules.
The system would enable globalisation to work for the environment - not, as you fear, prevent it from doing so. Current information deficits encourage consumer backlash against flowers grown in east Africa and flown to London, despite them being more carbon-efficient than those grown in energy-intensive greenhouses in Europe. A smart tariff system would be far preferable to consumers shifting en masse to products labelled "locally grown" - from both an environmental and a free trade perspective.
The economically ideal solution is a global cap or tax scheme, but smart tariffs come in as a close second. In addition, they would ease the transition by inducing poor exporting nations to move towards a path of lower emissions sooner.
Andreas Vogel,
Vice President, SAP Research
Gernot Wagner,
Consultant, Boston Consulting Group
Posted by Gernot Wagner on Monday, January 07, 2008. 
