The convergence of environmental and fiscal concerns in the United States has led to increased interest in the possibility of a carbon tax. Scholars and policymakers in Washington are exploring relevant design questions, including whether and how the competitiveness concerns of energy-intensive, trade-exposed (EITE) industries should be addressed.
Two approaches have been discussed in the academic and policy communities: border tax adjustments in the form of tariffs on the carbon content of imports and some form of tax relief (for example, rate reductions or tax credits) for domestic EITE firms. Looming over either of these approaches is the complicating issue of World Trade Organization (WTO) rules and strictures against discriminatory trade policy.
This workshop focused on trade, competitiveness, and possible policy approaches, featuring the presentation and discussion of four new papers:
Using Border Tax Adjustments to Address Competitiveness Concerns
David Weisbach, University of Chicago
Tax Relief for Domestic EITE Firms to Address Competitiveness Concerns
Gilbert Metcalf, Tufts University
WTO Considerations that Affect Design of Competitiveness Policy
Joel Trachtman, Tufts University
Framework for Evaluating Different Approaches to Addressing Competitiveness Concerns
Joseph Aldy, Harvard University