Economy

Jan 6, 2014

Plan B? How a green tariff could save the carbon price

Here's a way to save the carbon price; levy a green tariff at the border, so Australian industry doesn't suffer. Critics say that would breach international trade law, but hold on -- Crikey has found that's not necessarily the case.

Cathy Alexander — Freelance journalist and PhD candidate in politics at the University of Melbourne

Cathy Alexander

Freelance journalist and PhD candidate in politics at the University of Melbourne

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Worried the carbon price is hurting industry and costing jobs? There’s a neat solution no one’s talking about — and it doesn’t involve axing the tax.

22 comments

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22 thoughts on “Plan B? How a green tariff could save the carbon price

  1. AR

    Good as Plan B but as noted by many above, it presupposes that TT & his tory Uglies are susceptible to rationality – see exhibit A, Corey Bernadi.

  2. Cathy Alexander

    That’s interesting CML, I wasn’t aware that a proposal for a tariff clause was contained in any of the Australian carbon pricing proposals / legislation. Does anyone have a URL? I’d be fascinated to see what they were proposing.

    I’ve also heard the previous ALP federal government received some legal advice to definitely not pursue a carbon BTA with the carbon price. I’d love to know more from any moles out there …

    And Aidan, as you correctly point out, a carbon tariff would be very complex to administer – perhaps prohibitively so. To design a BTA in a way that would likely pass the WTO would not necessarily be the most logical or effective BTA.

  3. Putto

    Cathy (and CML) – Border Tax Adjustments were discussed in relation to assistance or protection for Emissions Intensive Trade Exposed industries during the development of the CPRS back in 2008. The final policy adopted an allocation of free permits for EITE industries rather than BTAs. The CPRS Green Paper and submissions would be the place to start.

    In addition to discussing the option of BTAs as part of our carbon pricing, it is important to consider the implications of other countries with carbon prices (40-odd and counting) applying BTAs to our exports if the carbon price is abolished. This needs far more attention than it has been getting.

  4. Roy Inglis

    Logical and better than a domestic cost on carbon / ETS but that won’t mean a jot to the current government.
    Don’t expect much from Labor either.
    I recall during lead up to the current policy, someone from the Labor Cabinet making a firm statement that Labor would never consider such a thing.

  5. Putto

    More on the CPRS Green Paper – it can still be found at a number of places online (eg. http://www.dpac.tas.gov.au/__data/assets/pdf_file/0004/162688/CPRS_Green_Paper_-_doc_No_1.pdf ).

    Section 9.2 – the government’s preferred position is to provide assistance via free permits rather than exemptions, BTAs or cash payments.

    The justification for excluding BTAs is given as: “Since it would be difficult to make such assessments simple, transparent and verifiable, the risk is that if they were widely adopted, border adjustments could be used to pursue protectionist policies and constrain global trade. This could be very costly for a small, open economy like Australia.”

    While the original consultation website has long disappeared, many individual submissions can still be found online (eg. https://www.google.com.au/?gfe_rd=cr&ei=JUPLUrfIOKuN8Qea_ICADg#q=carbon+pollution+reduction+scheme+green+paper+submissions).

    Looking through this older material is a handy indicator of exactly how far the climate policy debate has deteriorated. Back in 2006-9, the public understood the difference between a carbon tax and an ETS, and there were detailed public discussions about particular complications, such as how to deal with leakage and trade-exposed industries. Then it all became about a great big new tax.

  6. bobcats

    It’s refreshing to see a proposal that may reflect some level of national aspiration-apparently the better health of the planet is a value that is currently sovereign and ‘free’ trade agreements are the natural enemy of sovereignty. Scotts’s (above) assumption that our exports are compromised by tariff barriers doesn’t hold for minerals- we have too much and can sell too cheap to worry about tariffs and agriculture is continually stymied by a myriad of international barriers and subsidized product-particularly from the U.S. who can be very selective about how the rules apply to them. The WTO is a unelected, unrepresentative nest of corporate lawyers. Trade policy since the ascendency of the WTO is written for international corporate capital. Those nations that would aspire to reasonable social policy, environmental protection and labour standards do so at their peril in the current value-free interantional marketplace and the feckless threat of corporate mobility.

  7. Cathy Alexander

    I read that with interest Putto.

    I also take your point about us abolishing our carbon price, and other countries with a carbon price perhaps adopting a BTA. The EU could do it, or possibly countries within the EU that adopt an additional carbon pricing mechanism on top of the EU ETS (France?). China may have a national carbon price in some years’ time, and they could levy a BTA. Similarly, the US – if they were to go down the path of a carbon price, may go for a BTA. They are perhaps the most likely country to do it.

    In some ways a BTA’s real use could be in making a carbon price more palatable to a domestic audience, rather than the actual assistance it would offer to domestic industry or pressure it would put on other countries.

  8. CML

    Many thanks, Putto. I didn’t know where to find the information, but was sure I had read/heard something about this before. My recollection is that it was something to be considered in the future, as a response to those countries who refused to ‘put a price on carbon’.
    Also thought it was an argument used in the domestic debate about repealing the carbon price legislation. In other words, Australia may become subject to some form of ‘import/export tariff’ from our trading partners if/when they introduce their own carbon pricing scheme.
    Makes sense, but don’t remember where I heard about it. Please forgive a senior citizen!!
    PS: Thank you also to Cathy Alexander for your response.

  9. Putto

    Cathy and CML – glad to help. I knew I kept all that old stuff around for a reason.

    The CPRS development and consultation process was actually very detailed involving a diverse range of people. The filter of politics limited what made it through to the final proposal, and eventually to the current carbon price, but it covered a lot of ground to get there.

    I really don’t think it’s possible to overestimate the issue of BTAs being applied to Australia rather than by Australia. The industries that have been campaigning so hard to have the carbon price repealed could easily find that they have to pay an equivalent carbon price anyway, in another jurisdiction, and without the generous compensation and transitional arrangements they currently have in the domestic scheme. Before too long, the same crowd will be campaigning for the re-introduction of a domestic carbon price, but it will need to start faster and harder and will hurt far more. The issue gets a mention every now and then but the message doesn’t seem to have sunk in.

  10. Roger Clifton

    Protectionism is infectious. It would be a neat event in history for China to take the lead and install their own carbon tariff, to be followed in turns by the rest of the world.

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