EU trade chief-designate rejects carbon border tariffs

BRUSSELS Tue Jan 12, 2010 10:37am EST

European International Trade Commissioner-designate Karel De Gucht of Belgium talks to reporters after addressing the European Parliament International Trade committee in Brussels January 12, 2010. REUTERS/Yves Herman

European International Trade Commissioner-designate Karel De Gucht of Belgium talks to reporters after addressing the European Parliament International Trade committee in Brussels January 12, 2010.

Credit: Reuters/Yves Herman

BRUSSELS (Reuters) - The European Union should not impose border tariffs on goods from countries that fail to cut back their climate-damaging emissions, the EU's trade commissioner-designate said on Tuesday.

"I don't think that's the right approach myself," Karel de Gucht told members of the European Parliament, which will vote whether to approve the European Commission line-up on January 26. "It's an approach that will run into many practical problems."

Europe has pledged to cut its emissions of carbon dioxide, which are blamed for climate change, to a fifth below 1990 levels over the next decade.

But manufacturers worry that the cost of cleaning up factories and power-generators will make their products more expensive and less attractive than cheap imports from rivals in India and China.

Steel industry body Eurofer urged the new commissioners on Tuesday to secure a level playing field for EU industry.

"This is more urgent than ever before, given the failure of the Copenhagen climate change negotiations," said Eurofer director general Gordon Moffat.

Some politicians, particularly in France, have said that imposing border tariffs on goods from carbon-intensive manufacturing regions would help redress any imbalance. But De Gucht disagreed.

"The big risk is that there will be slippage into a trade war with people outbidding each other on such measures," said De Gucht. He called on politicians to stay within market laws while protecting the environment.

ENERGY TAXATION

He also told the European Parliament he supported the abolition of tariffs on environmental goods, such as wind turbines and solar panels, but did not envisage an agreement on the issue at the World Trade Organization.

De Gucht, who is Belgian, promised to try to convene a "coalition of countries" to eradicate taxes on green goods as part of the global fight against climate change.

In another hearing in the European Parliament, Algirdas Semeta, the nominee for tax commissioner in the new EU executive, underlined the importance of pushing through new rules on energy taxation within the EU.

"The energy taxation directive will be one of my first priorities in my future job," Semeta said. "I think in the future, if we would move forward with green taxation it would allow us to decrease taxation on labor."

Several EU countries such as Sweden and France favor the use of internal carbon taxes to persuade consumers to reduce their climate impact.

But some countries including Britain have always fiercely guarded their sovereignty on tax issues, suggesting any pan-European rules would be difficult to push through.

If approved by parliament, Semeta's team would write the new energy taxation rules from scratch. But he appeared to suggest they would mirror themes in a draft prepared by his predecessor that was never completed. That draft proposed taxing fuels according to their carbon dioxide content.

"CO2 tax...splits the energy taxation between the energy element and the CO2 element," said Semeta. "That will help us to establish clear pricing signals."

(Reporting by Pete Harrison, Darren Ennis and John O'Donnell; editing by Keiron Henderson)

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