Trade-based CO2 regulation raises its fair head

The NY Times wrote about a French proposal to tax imports from countries that refuse to comply with the Kyoto Protocol. I've seen several mentions of similar ideas over the last year or so - in other words, an unstoppable phenomenon!

As I wrote last year, I think trade-based CO2 regulation is a great idea. I continue to believe, until provided contrary evidence, that this is a legally-viable way to get US involvement in an international accord through a majority vote that would otherwise require a treaty's two-thirds approval in the US Senate. And as the French are suggesting, it's also a way for the rest of the world to force cuts by countries like the US and Australia that are free riders.

Taxing the imports in the right way would be important. Increasing taxes for products composed of non-recycled material would give an advantage to recycling, which is a decent proxy for saving energy and reducing emissions. So would biasing the tax on energy-intensive products produced in the coal-based eastern half of the US, versus the more diverse energy sources in the western half.

A revenue-neutral import duty would be even better - you increase the tax on bad products and reduce it on good ones. This might have a slight chance of being acceptable under the WTO as a means of requiring foreign products meet the same environmental standards as Kyoto-compliant country's domestic products. I'm not sure though - getting serious might require the rest of the world to overlay the WTO with a CO2 trade agreement, and make the overlay the controlling agreement, regardless of whether the US agrees. It's a matter of willpower. I concede it won't be easy, but it's not impossible if the rest of the world is serious, and the threat itself could make future American governments more reasonable.