To B(TA) or Not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective

27 Pages Posted: 20 Dec 2011

See all articles by Henrik Horn

Henrik Horn

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR); Bruegel

Petros C. Mavroidis

Columbia University - Law School; European University Institute - Department of Law (LAW); European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Date Written: November 2011

Abstract

This paper asks two questions concerning border tax adjustments (BTAs) for climate purposes, when viewed from a trade perspective: First, under what conditions are BTAs possible in the WTO‐world? To address this issue, the paper provides a detailed discussion of the relevant law and case law. We also apply our main conclusions on what we consider to be paradigmatic cases of measures to address climate change where trade concerns are raised. We conclude that the WTO regime is no major obstacle to those aspiring to use BTAs, although the allocation of the burden of proof could be an issue. The second issue addressed is whether the economic literature on the desirability of BTAs adequately reflects concerns that have been raised in the trade policy community. Here, we conclude that it has hardly addressed these concerns at all. We also point to some aspects of BTAs that would be important to take into account in a more complete analysis.

Suggested Citation

Horn, Henrik and Mavroidis, Petros C., To B(TA) or Not to B(TA)? On the Legality and Desirability of Border Tax Adjustments from a Trade Perspective (November 2011). The World Economy, Vol. 34, Issue 11, pp. 1911-1937, 2011. Available at SSRN: https://ssrn.com/abstract=1974828 or http://dx.doi.org/10.1111/j.1467-9701.2011.01423.x

Henrik Horn

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.econ-law.se

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://www.econ-law.se

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium
Belgium

Petros C. Mavroidis

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

European University Institute - Department of Law (LAW) ( email )

Via Bolognese 156 (Villa Salviati)
50-139 Firenze
ITALY

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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