Climate taxes and the WTO: is the multilateral trade regime a further obstacle for efficient domestic climate policies

Industrialized countries are often required to make unpopular policy choices in order to efficiently tackle climate change. On the one hand, domestic industries might consider national climate measures as an excessive burden that may damage their competitiveness. On the other hand, the public may not be willing to pay a higher price for climate friendly products. Furthermore, an obstacle may arise from other international legal regimes whose goals may be undermined by domestic climate measures. In this paper I will examine this last possibility. In particular, I will assess whether the international trade regime may constitute an obstacle for future domestic climate measures. An affirmative or negative conclusion will be drawn after having answered three crucial questions.
First, have domestic climate measures already clashed with trade regimes? In 2001 the problematic relationship between a taxation scheme adopted by Finland to improve energy efficiency and EC rules on the free movement goods highlighted this possibility.
Second, are taxation schemes still being used in order to tackle climate change? Current climate policies show that not only are taxes being established, but that measures based on border tax adjustments are also being taken into consideration for the future.
Third, are climate taxes WTO compatible? The discussion of this point will involve an analysis of those WTO rules with which the domestic climate measures may come into conflict and the environmental exceptions that could be applied to the climate taxation schemes.
Although trade regimes should not constitute an obstacle for domestic climate measures, as the EU example demonstrates, this is not always the case. Therefore, proposals able to combine the goals of the two regimes must be put forth in order to prevent the WTO from being considered another obstacle for efficient domestic climate policies.