1. INTERNATIONAL TRADE LAW
AND BORDER TAX ADJUSTMENTS

2. Citizens’ Climate Lobby
Introduction slide
Ross Astoria, JD/PhD
Chair, Board of Directors
Citizens’ Climate Lobby

3. 1 2 3 4 5 Agenda Overview of Trade Agreements Tariff Bindings
Most Favored Nation, GATT Article I 4
National Treatment, GATT Article III 5
General Exceptions, GATT Article XX

4. 6 7 8 9 10 Agenda Dispute Resolution and Examples
Custom Unions and Free Trade Agreements 8
Technical Aspects of BCAs 9
Exercises 10
Questions

5. General Agreement on Tariff and Trade, 1947
Marrakesh Agreement, 1994

6. Tariffs
HTS of the U.S.,
Section 1:
Live Animals and Animal Products

7. GATT Article I: Most Favored Nation
With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III,* any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.
GATT Article 1, Paragraph1

8. GATT Article III: National Treatment
GATT Article III, paragraph 2
The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products.

9. GATT Article XX: General Exceptions
Subject to the requirement that such measures are not applied in a
manner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:
. . .
(b) necessary to protect human, animal or plant life or health;
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;
GATT
Article XX(b) and XX(g)

10. Process: Consultation and Arbitration
Consultation, then arbitration before a panel, then an appellate board, then circulated by the dispute settlement body (DSB) to all member countries.
Offending nation-state can then comply with the decision, if it does not, then the other country can implement countervailing measures, which the WTO supervises to make sure they are “equivalent.”
Between nation states: for the United States, this is the Department of Commerce, but private parties can petition the Department to initiate a consultation.
Ex: United States – Countervailing Measures on Supercalendered Paper from Canada (complainant: Canada) (

11. Supercalendered Paper
Alleged Subsidies
1. Province sponsored loan with below market rate for working capital, increased productivity and efficiency
2. Province grants for maintaining hot idle status of equipment.
3. Funds to keep plant’s supply chain solvent
4. Industrial Electricity Rate Program (Rebate per KWh for efficiency)
5. Preferential Electricity Rate from utility, approved by the NS commission

12. Custom Unions and Free Trade Areas
A free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
GATT Article 24:8(b)

13. Border Carbon Adjustment
NT: no tax “in excess”
MFN: no less favourable
Distinguish between Emission-Intensive Trade-Exposed Products and Fossil Fuels
Identify carbon dioxide content of fossil fuels = prospective ghg emissions
Identify embodied ghg emissions of EITE = carbon “footprint”
Apply same tax rate to the embedded emissions and fossil fuels ghg
Credit importing country’s mitigation efforts
Go make bilateral and multilateral trade agreements to suspend the BTA

14. BCA on Fossil Fuels
California’s Low Carbon Fuel Standard

15. BTA on Carbon Intensive Products
Identify Carbon Intensive Products

16. Credit Other Countries Mitigation
Credit other countries mitigation efforts by reducing the BCA
Suspend BCA when importing country has at least equivalent mitigation measures
Explicit carbon prices v.
Non pricing regulatory reform (e.g., a net-zero building code, fiduciary liability for not factoring in climate change in investment decisions)
Through international agreement
Paris Agreement – requires accounting procedures for ghg, uniformity of measurement and reporting

17. Three Exercises
Use the U.S. Harmonized Tariff Schedule to determine the tariff binding on imported steel, imported petroleum, and aluminum.
What, if any, countervailing duties have been placed upon steel or aluminum trade between the U.S., China, and Canada?

18. Three Exercises
3. The country of Fireland is a member of the GATT. Its Harmonized Tariff Schedule has a binding on “meat, salted” which ranges between 10% and 15% and another on “chicken, frozen” which ranges between 5% and 8%. A company (“Big Chicken”) wants to import frozen, salted chicken breast into Fireland. The customs authority of Fireland has classified Big Chicken’s product as “meat, salted” and imposed a 10% import tariff. Big Chicken claims that its product is “chicken, frozen” and thinks it should be charged a 5% import tariff. Who gets to determine this question?.

19. Three Exercises Options: Fireland Big Chicken
The country in which Big Chicken is incorporated
Someone at the WTO
God judgeth all tariff bindings

20. Exercises and Questions
Okay. Suppose the border carbon adjustment is trade law compliant – I don’t believe China will follow the trade laws.
Do we really have the data?
Won’t this start a trade war?
What about the BCA and non-fossil fuel emissions from, for example, deforestation?
Why isn’t the BCA a tariff?
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