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The theoretical claims for eco-tariffs are rigorously analyzed within a unified framework formed of an international trade model enriched with both a domestic and a global externality. During the course of the analysis the model is modified to analyze an array of contexts for which eco-tariffs have been claimed to improve environmental quality or welfare. The circumstances and conditions are characterised under which such tariffs can be shown to improve environmental quality and social welfare, taking account of general equilibrium effects. The theoretical results are applied in a policy analysis of eco-tariffs and other trade instruments in the context of domestic and global environmental policy in order to assess the relevance of the eco-tariffs that have been subjected to the theoretical analysis. Finally, the GATT/WTO rules and regulations are presented, since to date these have banned the use of eco-tariffs. The rules and regulations are mapped against the theoretical results to show which rules ought to be changed.
List of contents
1. Introductory Remarks.- 2. Eco-Tariffs to Avoid Eco-Dumping and Environmental Races Towards the Bottom (ERTB).- 3. An International Trade Model with Pollution and Eco-Tariffs.- 4. Tariffs to Avoid Eco-Dumping for Terms of Trade Reasons.- 5. Tariffs to Avoid Eco-Dumping for Strategic Trade Policy Reasons.- 6. Tariffs to Counteract Eco-Dumping Caused by Regulatory Capture.- 7. The Role of Tariffs in Protecting Global Environmental Commons.- 8. An International Trade Model with Spill-Over Pollution.- 9. Tariffs as Second Best Instruments to Internalise Spill-Over Pollution.- 10. Incentive Effects of Eco-Tariffs.- 11. Tariffs to Counteract Eco-Dumping Caused by Regulatory Capture.- 12. Eco-Tariffs and Domestic Environmental Policy.- 13. Eco-Tariffs and Global Environmental Policy.- 14. Concluding Remarks.- References.
Summary
The theoretical claims for eco-tariffs are rigorously analyzed within a unified framework formed of an international trade model enriched with both a domestic and a global externality. During the course of the analysis the model is modified to analyze an array of contexts for which eco-tariffs have been claimed to improve environmental quality or welfare. The circumstances and conditions are characterised under which such tariffs can be shown to improve environmental quality and social welfare, taking account of general equilibrium effects. The theoretical results are applied in a policy analysis of eco-tariffs and other trade instruments in the context of domestic and global environmental policy in order to assess the relevance of the eco-tariffs that have been subjected to the theoretical analysis. Finally, the GATT/WTO rules and regulations are presented, since to date these have banned the use of eco-tariffs. The rules and regulations are mapped against the theoretical results to show which rules ought to be changed.
