Saturday, September 21, 2019
The issue of ecology Essay Example for Free
The issue of ecology Essay The issue of ecology as a transnational issue has become highlighted with the intensification of world trade. As such, it becomes a global responsibility and a consideration in developing trade policies. As the primary governing body of international trade, the World Trade Organization (WTO) has been one of the pioneers in equating environmental responsibility with trade (Deal, 2002). At the same time there, has been regional efforts to standardize environmental laws to mitigate the impact of development in shared environs as illustrated by the efforts of the European Union (EU), North Atlantic Free Trade Agreement (NAFTA) and the Association of South East Asian Nations (ASEAN) (Sampson, 1998). One of the efforts made by the WTO is the development of the Kyoto Protocol which is aiming to mitigate environmental issue particularly global warming by establishing a trade system for emissions. However, there has been a difficulty in the implementation of the regulation because of varying views on the policies as well as difficulty in monitoring emissions. At the same time, there have been some issues regarding the institution of multilateral agreements that are contradicting or undermining the Kyoto Protocol or the status of most favored nations (MFN) (Brewer, 2004). Focus For WTO members, the use of energy tax adjustments could have significant implications. The issue raises difficult environmental, trade policy issues, economic issues. It also raise the internalization of environmental costs and the Ã¢â¬Å"polluter paysÃ¢â¬ principle, the effects on trade competitiveness and relationship between the multilateral environmental agreements and WTO agreements. The main issue that whether Article III: 2 first provisions of the 1994 GATT or the General Agreement of Tariffs and Trade ponders the use of border tax adjustment (BTA) on Ã¢â¬Å"finalÃ¢â¬ products for taxes on the manufacture of inputs. Albeit the decision in Superfund case, discussed in the latter of this section, the question will turn on a proper analysis of the taxes Ã¢â¬Å"applied, directly or indirectly, to Ã¢â¬Å"the like products to be compared, as opposed to the overall Ã¢â¬Å"fiscal burdenÃ¢â¬ on producers from taxes on inputs. The Kyoto Protocol and the General Agreement of Tariffs and Trade In December 1997, the Kyoto Protocol to the UN Framework Convention was adopted. Under Kyoto Protocol, only Annex 1 countries are subject to legally binding emissions reduction commitments for the commitment period 2008-2012 in post-2000 scenario. Annex 1 parties or developed countries have to meet individual emission reduction targets listed in Annex B of the Protocol. Developing countries or non-Annex 1 parties are not subject to specific emission reduction commitments. Though over 120 countries have ratified the Protocol but the Protocol has yet to come into force. U. S. A and other developed countries have to date indicated an intention not to ratify the Protocol. Another contention is with regards to Article 1, II, VI and VII of the GATT and their potential implication with border tax adjustments. Further, energy tax adjustments may be challengeable under Article XXIII: 1 [b] of 1994. Finally, Panel approach to WTO-consistency will be governed by the reasonableness of the specific measure and its appreciation of the wider international implications. Energy tax adjustments as per Article III: 2 first sentences could offer potentially broad scope for countries to apply energy tax adjustments as disguised barriers to trade. Such results would do little to serve the objectives of either the WTO multilateral trading system or the international response to climatic change. Border Tax Adjustment Border Tax Adjustment [BTA] is a tax levied on imported products to adjust or compensate for taxes levied on domestic product. The main goal of BTA is to ensure trade neutrality of domestic taxation and thereby safeguarding competitive equality between imported and domestic goods. BTA is not necessarily levied at the border and imports may be taxed at the point of sale or consumption. Sales tax, consumption taxes or excise duties, value added taxes are examples of domestic taxes that might be subject to BTA. Likewise, a BTA on imported energy products such as imported natural gas or diesel fuel and other fossil fuels for domestic excise duties would fall within this group. Though the taxes on energy have been levied by governments for fiscal purpose for long time, now there has been a change in trend to levy Ã¢â¬Å"energy taxÃ¢â¬ mainly for Ã¢â¬Å"environmentalÃ¢â¬ purpose. Energy tax is being levied on energy inputs such as coal ,electricity or gasoline which in turn calculated in value terms , or on the basis of its content of carbon of fossil fuels which is also known as Ã¢â¬Å"carbon taxesÃ¢â¬ . As of now, there exists no border tax adjustment scheme in place for taxes on energy inputs employed in the production of final products. However, European and other high energy taxing governments are contemplating to introduce such measures in near future due to the pressure exerted by environmental and industry groups. But there are increasing pressures from environmental groups to enforce strictly trade measures to enforce Kyoto Protocol objectives against non-signatories like United States. These environment groups regard the U. S. rejection of the Kyoto protocol is unfair as it places the European business at a disadvantage. They argue that Europe has the right to penalize the U. S goods for the pollution they cause under Ã¢â¬Å"Polluters pay Ã¢â¬Å"policy. Cases for Consideration A BTA can be applied on final goods or on inputs used in the production process. An example is the border tax adjustment on imports of aluminumÃ¢â¬â¢s for taxes on energy used in the production process as taxes are being levied on embodied energy in the final good that are adjusted, as opposed to taxes on the final goods itself. These measures are regarded as contentious with linkage to WTO trade and environmental debate. Albeit the Appellate bodyÃ¢â¬â¢s findings in the United States Ã¢â¬â Shrimp dispute, the exercise of trade measures applied on the basis of process and production methods (PPM) Ã¢â¬â in this case embodied taxes, carbon or energy Ã¢â¬âremains highly contentious. BTA for domestic taxes on energy inputs also raise significant equity and sovereignty concerns on the use of trade measures to inflict domestic environmental or taxation systems on other countries. Super Fund The case is against levy of superfund tax by U. S. A on petrochemicals and other chemicals and inputs when imported and sold in U. S and no tax is levied when it is exported out of U. S. U. S claimed that the aim of the tax was to compensate the cleaning up cost of hazardous waste sites and towards public health programs. When an importer fails to provide the details of input which he imported, then a penalty tax rate of 5 % was imposed. The GATT panel ruled that the tax on imported substance was a tax Ã¢â¬Ëdirectly imposed on productsÃ¢â¬â¢ and hence eligible for border tax adjustments. The panel held the US super tax would be consistent with the Article III: 2 first sentence as long as it is equivalent to tax borne by the like domestic substances. The U. S direction to provide the information of inputs may make such information available to trade competitors and would have a real effect in discouraging trade. In this case, it appeared that neither the GATT Panel nor the parties sought to distinguish between the tax applied to the imported products, the like domestic products or the chemical products used in the production of the like domestic products. The Panel seemed to accept the US argument that the imported product and that the like domestic product was subject to the same Ã¢â¬Å"fiscal burdenÃ¢â¬ .