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Global Warming: The Gathering Storm

Russia resurrects the Kyoto Protocol and the prospect of either mandatory CO2 emissions cuts for U.S. utilities, or the start of a global trade war.
Fortnightly Magazine - August 2004

conservation of exhaustible natural resources. Article XX(g) of GATT states:

[4] 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 Member of measures . . .
[1] relating to the conservation of
[2] exhaustible natural resources
[3] if such measures are made effective in conjunction with restrictions on domestic production or consumption. 10

What is required to satisfy the four elements of Article XX(g) has been interpreted by the WTO Appellate Body in two cases involving the U.S. The first case, U.S. - , 11 concerned measures for reformulated gasoline to protect air resources. The second case, U.S. - , 12 concerned measures for shrimp harvesting to protect endangered sea turtles. Together, the cases established firmly the principle that a country may impose a trade restriction on a product manufactured in another country if: (1) the product is manufactured in a manner that depletes a natural resource of the importing country; (2) the restriction is primarily aimed at and reasonably related to the conservation of a natural resource; (3) the restriction applies even-handedly both to domestically manufactured and imported products; and (4) the restriction is not imposed arbitrarily or unjustifiably such that there are no other reasonable options available that would avoid the discrimination between like domestic and imported products or between like imported products. This last requirement is generally referred to as the "Chapeau" or introductory clause of Article XX.

The Parameters of an EU CO 2 Tax on U.S. Goods

A narrowly tailored carbon tax on U.S. goods manufactured without CO 2 controls could withstand challenge before the WTO, particularly if the tax is dedicated to furthering the aims of the Kyoto Protocol by funding JI and CDM projects that offset the rough quantity of CO 2 emissions generated during the manufacture of the imported products in the United States.

First, there should be little question that the global climate and associated ambient temperatures is an exhaustible natural resource. In fact, a decade ago, the United States made that very argument to the WTO. In U.S. - , the United States argued that automobile Corporate Average Fuel Economy (CAFE) standards were valid measures under Article XX(g) because they were designed to conserve fossil fuels that when combusted contributed to climate change notwithstanding that they had a disparate impact on European automobiles. Given its position, the United States will be hard-pressed to now contend that CO 2 controls do not conserve an exhaustible natural resource-the climate.

Second, there is little question that the manufacture of goods and the combustion of motor vehicles in the United States without some form of CO 2 control-whether pursuant to a cap and trade program, a carbon tax, fuel economy increases, or other technology-forcing measures-serves to exhaust this natural resource. The connection between anthropogenic CO 2 emissions and global climate change is now