Changing Climate for Carbon Taxes: Who’s Afraid of the WTO?

July 2013

Federal efforts to impose a cost on carbon emissions raise meaningful questions about the international competitiveness of U.S. energy-intensive industries and the likelihood of emission leakage to countries without similar policies. Any efforts to “level the playing field” for international trading partners will raise flags regarding compatibility with our international obligations, particularly with respect to the rules of the World Trade Organization (WTO). In this paper, former WTO appellate body member Jennifer Hillman discusses the design of potential carbon tax border measures and how they can comply with WTO obligations.