Restriction And Incentive Of WTO Rules To Low-carbon Economy

In current international politics and law, the United Nations Framework Convention on Climate Change (UNFCC)and the Kyoto Protocol have become worldwide important rules. Green economy, environmental protection, low-carbon have become worldwide words, and have entered into political, economic, diplomatic, commercial and security fields of most countries. Climate change and environment issues are becoming key and significant problems in diplomacy and international relationship. The competition between big powers concentrates on the development of green and low-carbon economy. Therefore, as a big and responsible country, China must make its own low-carbon strategy and have its say in the world.WTO is the main structure of world trade, constituting the institutions and rules of the trade, so we can't ignore the relationship between low-carbon economy and WTO. Incentive and restriction of WTO rules to low-carbon economy which this thesis studies is a new issue in both theory and practice. The thesis selects some main low-carbon measures——application of GATT Article XX, carbon tariff, income tax preference and subsidy, and carbon labeling as objects to study. The thesis analyses, discusses and forecasts how these measures are applied and justified in in terms of WTO rules and its judicial decisions.Chapter I is introduction, it outlines the general situation of the WTO rules binding and encouraging low-carbon economy. In the sense of binding, the traditional defining of like product, the non-discrimination of GATT articleI, III and XX, forbidden and restricted subsidy are among such; and in the sense of encouraging, PPMs good for environment protection, GATT Article XX, environmental subsidy and WTO's respect to values of environment and human rights.Chapter II talks about like product, GATT Article XX and low-carbon economy. Like product is the starting point in deciding whether a low-carbon measure is consistent with National Treatment Principle, or is discriminatory. Traditional criteria of like product is based on the physical property and use value of products, not considering carbon content of products, which is a key obstacle to low-carbon economy measures. PPMs is a new criterion of like product, which considers environment impacts of products in their production and process. If carbon content is able to become a criterion of like product, low-carbon economy measures, which implement different treatment because of different carbon content, can be justified in WTO rules.We can also find legitimacy for low-carbon economy measures in GATT Article XX . When a WTO member prohibits or restricts non low-carbon products from importing, it will quote Article XX(b)(d)(g)."Necessary"is a important condition for quoting XX(b)(d)(g). This chapter uses five main cases to analyse and conclude the development and changes of"necessary", including Thailand– Cigarettes(BISD 37S/200),European—Asbestos(DS135),Korea–Beef (DS161),Brazil–Retreaded Tyres(DS332),and United States—Gambling(DS285). Recently, the requirement of necessity is becoming broader, which is an encouragement of low-carbon economy. XX(b) and (g) are so called Environment Exception or Green Clause. The application of (b) and (g) , the relationship between the two clauses, and the legal points of the newest low-carbon economy case about (g)—China Affecting nine raw materials exports——are all analysed in this chapter.Chapter III talks about carbon tariff. Carbon tariff is a kind of carbon tax, and also a kind of BTA (border tax adjustment) , which is imposed on the border, thus is named as carbon tariff. Imposing carbon tariff has economic theory and environment protection theory. to support.. According to Externality Theory, governments need to implement tax measures to internalise externalities. The function of carbon tariff is to avoid double taxation and to balance competitiveness between carbon-taxed products and non carbon-taxed products. From the view of environment protection law, we have three reasons to impose carbon tariff. First, according to the Polluter Pays Priciple, imposing carbon tax on high-carbon products is consistent with environment protection requirement. Second, according to Common-But-Differentiated Respons- ibilities, developed countries takes heavier mitigation burden than developing countries. If only developed countries implement carbon tax, some companies will transfer their energy industry to lower carbon tax burden countries to gain profits, thus carbon leakage takes place, which will cut down global mitigation effects. Third, carbon tariff is a particular measure of Market Mechanism, which is the second generation of environment protection mechanism. Compared with traditional Command- and–Control Mechanism, carbon tariff is more flexible and less costly. Compared with other measures in Market Mechanism, such as International Reserve Allowance, carbon tariff is more apt to internalize environment cost, and promote companies to mitigate.Carbon tariff is more or less lawful in international law. Kyoto Protocol is the important international treaty for carbon tariff, which requires countries to control carbon dioxide mitigation. Carbon tariff means different economic impetus and pressure to different countries. Therefore, there is a political game between developed countries and developing countries, which makes carbon tariff have a variety of economic, political, and legal problems. Recently, some internationaly authoritative scholars, such as Joseph Stiglitz and Richard Cooper, proposed a totally new idea- global emission tax and border tax adjustment measure, which is new idea and approach, worth studying and researching.This chapter suggests China should have its own standpoint on carbon tariff. First, China can levy carbon tax to avoid tax outflow. Second, China should have its say in international negotiations to delay the implement of carbon tariff. Last, China should guide right direction of public opinion, and admit that carbon tariff is an critical measure to develop low-carbon economy.Chapter IV deals with income tax preference and subsidy. United States- Foreign Sales Corporation (FSC) case makes income tax problems prominent in WTO. Whether income tax is subject to GATT Article III, or is a subsidy, is a pioneer issue in academic field. Income tax favour is regarded as an important policy to promote low-carbon economy, however, this measure is apt to be defined as a prohibited subsidy. This Chapter addresses income tax preference and subsidy in three parts. Part One sketches out the definition and types of subsidy, and particularly criterion of prohibited subsidy. Viewed from angle of subsidy, tax favour preference is to reduce company's costs and to make the company gain profits indirectly rather than a kind of profit that a government gives to a company directly. Income tax preference is a kind of direct tax, so whether it's subject to GATT Article III, is an arguable issue. Traditional WTO jurisprudence argues, only"goods"can be subjected to GATT rules, therefore, GATT Article III only refers to indirect tax. We can not say income tax has enough contact with goods, neither can we say income tax belongs to the domestic tax under GATT Article III. After the case of FSC, there's an argument that income tax can be subjected to GATT Article III in theory probably falls into the scope of subsidies in SCM.Part Two argues that direct tax can be subjected to GATT Article III:2. Whether or not direct tax can be defined as the domestic tax under Article III:2, it can be subjected to Article III:4, only if it is affecting internal sale, offering for sale, purchase, transportation, distribution or use. Therefore, direct tax probably can be subjected to National Treatment of GATT Article III. The author suggests that we can make use of environment subsidy to defend income tax preference.Part Three discusses the feasibility of low-carbon subsidy. China needs to subsidize its low-level low-carbon technology and subsidize weak and small business. The author suggests that China should structure its low-carbon supporting regime from three aspects of business enterprises, technology and industry. This thesis also argues that GATT Article XX can extend to SCM, so that income tax preference and other low-carbon subsidy measures can be lawful under Article XX.Chapter V is about carbon labeling. Carbon labeling is a new kind of environment labeling, reflecting carbon content of products. It can guide consumers to purchase low-carbon products, thus affecting business direction, decision -making and strategy of producers. The new generation of environment protection mechanism -carbon labeling is voluntary rather than mandatory, and is more democratic and transparent in comparison with the two traditional environment protection mechanism. However, carbon label's functions and effects have irresistible and significant impacts on trade. In imposing carbon-labels, we should keep to the three following balances: (i) public interests and private interests ; (ii) consumers's values and objective assessment;(iii) regional effect, global effect and extraterritorial effect.