France, Italy want EU to apply carbon tariffs

EU Carbon Border Adjustment proposes pricing imports via the EU ETS, aligning with WTO rules to prevent carbon leakage, curb protectionism, and protect industries from unfair competition in emissions trading markets.

France and Italy urged the European Union to impose carbon tariffs on countries that are not part of a global agreement to curb greenhouse gases, an idea opposed by other EU members.

French President Nicolas Sarkozy, amid a French carbon tax debate over policy design, and Italian Prime Minister Silvio Berlusconi said in a letter to European Commission President Jose Manuel Barroso that the commission should include the measures in a report due in June on carbonemitting sectors.

Some EU members are worried that their industries, which pay for permits to emit carbon dioxide, will lose out to cheaper imports from countries that impose no such charges, a concern highlighted when 2009 EU emissions fell during the recession.

European law... foresees the possibility of including importers in the European system for trading emission quotas, Sarkozy and Berlusconi said in the joint letter.

The Commission report should define the conditions in which such an adjustment mechanism should be applied to EU borders, a point underscored by France's new carbon tax formula debates recently.

Germany last year criticized the idea of carbon tariffs as ecoimperialism, saying they would be a direct violation of World Trade Organization rules, even as the French PM signaled an end to a carbon tax plan at home.

Other EU members such as Sweden have also spoken out against the plan, while developing countries fear the measure would be a covert form of protectionism blocking out their products.

Sarkozy and Berlusconi said any mechanism should respect WTO rules. They said the measure would encourage more countries to curb emissions, aligning with Europe's Big 3 seeking higher emissions targets.

Everyone would know that if they refused to take sufficient steps in the concerned sectors, compensation equivalent to the effort made by the EU would be applied to their products, they said in the letter.

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