What Is an Environmental Tariff?

An environmental tariff, also known as an eco-tariff, is a tax on products imported from countries with inadequate environmental pollution controls. They are mechanisms to prevent nations from ignoring environmental controls to increase exports.

Understanding Environmental Tariffs

An environmental tariff is designed to deter countries with more relaxed environmental policies by making trading with them more expensive. Proponents of environmental tariffs believe that these tariffs lead to a harmonious blend of efforts from nations to establish environmental standards and that the tariffs 澳洲幸运5官方开奖结果体彩网:encourage non-compliant countries to improve their processes. 

An early proposal for an environmental tariff was introduced into the U.S. Senate in 1991, which would have imposed countervailing tariffs on goods from countries that did not enforce effective pollution controls in a manner that would constitute an unfair subsidy to their exports. However, this bill was never passed into law. Moreover,🐻 for a variety of reasons, environmental tariffs that impose this kind of trade barrier have proven politically undesirable. 

For one, developing or 澳洲幸运5官方开奖结果体彩网:less-developed countries (LDCs) raised concerns that developed nations may impose unreasonable standards to which developing and underdeveloped nations cannot adhere. The opposing argument maintains that part of the stated intent of early attempts at environmental tariffs was specifically to prevent an international race to the bottom among 澳洲幸运5官方开奖结果体彩网:emerging market economies. These standards could also just be pretexts for protectionist trade barriers against them that might threaten the viability of their nations' 澳洲幸运5官方开奖结果体彩网:economies.  

The consensus on the imposition of environmental tariffs was thus seen as counterproductive to the goals of international development and globalization. Because of this, environmental tariffs never gained acceptance under the 澳洲幸运5官方开奖结果体彩网:General Agreement♈ on Tariffs and Trade (GATT) or the 澳洲幸运5官方开奖结果体彩网:World Trade Organization (WTO).

Alternatives to Environmental Tariffs

Instead of imposing punitive environmental tariffs, the more accepted approach has been to lower tariffs with respect to "environmental goods." This approach was formally adopted under the Doha round of WTO negotiations in 2001, where ministers agreed in principle to reduce or remove tariff and non-tariff barriers on environmental goods and services. 

Environmental goods include pollution-control devices, such as catalytic converters and smokestack scrubbers, and renewable energy goods, like wind turbines. By lowering trade barriers for these and similar goods, the goals of promoting healthy environmental policies and fostering economic development are believed to be made more compatible.

However, some critics argue that this is counterproductive. Since increased gl🅘obal trade encourages industrialization, mechanization of agriculture, and long-dis🐼tance transportation of goods, lowering trade barriers for environmental goods is considered inherently contradictory to promoting a healthy environment. 

In addition to increased international trade in environmental goods, there has been an increase in environmentally preferable products (EPPs) designed with smaller 澳洲幸运5官方开奖结果体彩网:carbon footprints or otherwise lower environmental impact than their alternatives.

Example of an Environmental Tariff

One major example of an environmental tariff is the carbon border adjustment mechanism, a 澳洲幸运5官方开奖结果体彩网:border adjustment tax on high-carbon products like cement. The tax is intended to raise the costs of products imported into the EU from countries with less robust climate policies.

The Bottom Line

Direct environmental tariffs are uncommon because they tend to run afoul of international tradeღ commi🤡tments and treaties. However, other trade measures with similar environmental intent have become more common.