Tone deaf, eh? I hope your reading is correct since that improves the prospect of negotiating good outcomes in Copenhagen.

Of course I hope that such taxes are never introduced since their incredible complexity – both in terms of achieving WTO compatibility and simply of computation – invites abuse and a possible tit-for-tat collapse in world trade.

Of course, there has been no change in the rules, and of course there are plenty of cautions, but I think anyone attuned to bureaucratic understatement, reading the report and planning a carefully calibrated border tax on embodied carbon would see a bright green light here.

Peter Wood, I agree as regards W-M.

The provisions in W-M are different, and impose other conditions on countries. While I can see the temptation to do that, I don’t think it will help. My suspicion is that the best way to have an agreement being close to socially optimal is through the right sort of bargaining process, and strong penalities for non-participation and non-compliance. Strong penalties for non-participation and non-compliance should prevent a treaty from being based on the lowest common denominator.

The first paragraph in the Bridges quote says it all. There is no attempt to make a judgement about WTO rules compatibility. There is no claim that taxes are compatible with the rules only a list of characteristics such taxes would need to have. Necessity not sufficiency.

Are you sure? I wasn’t aware that there were any voting procedures associated with WTO. And a treaty at Copenhagen won’t be voted on either. It will be drafted by some kind of consensus procedures and countries will choose to sign on, or not. Then the signatories can choose whether or not to tax imports from non-signatories.

As regards the situation being unchanged, there has of course been no formal change. But the WTO has given a pretty clear indication of the way in which a challenge will turn out, namely that a BTA will be approved if it is designed with careful regard to the rules.

It is exactly the situation as before. There remain questions about whether a discriminatory border tax is consistent with the rules of the GATT. It might be. It will almost certainly be subject to a challenge.

That was the situation a month ago.

This seems like a distinction without a difference to me. The report stresses the need for global action on climate change. It then makes it clear that BTAs can be consistent with the rules of the GATT and that, provided they are designed with care, BTAs on countries that don’t comply with a global agreement on emissions will pass muster with WTO. That seems like “approval” to me.

Which is the whole point.

Obama sensibly hasn’t threatened anything – yet – but if Chindia are obstructionist at Copenhagen then he might, more in sadness than in anger of course, have to throw the BTA bone to Congress. And while US Administrations are usually reluctant to indulge in protectionist measures, Congressmen and Senators are not.

Obama might also do Rudd a favour and implicitly threaten Australia’s exports with a BTA if we don’t implement an ETS. Then the acid will really be on the Opposition to pass it the CPRS.