International Business Law Essay

One of the main concerns behind the Australian government’s proposal to put a price on carbon is that while environmental concerns remain one of the hottest topics in the world, a carbon tax is still being debated in most parts of the world and as a result, most countries don’t actually have any forms of carbon tax in place yet. This means that the introduction of a carbon tax would disadvantage domestic producers who will face increased competition due to increased costs as opposed to their foreign counterparts. The scenario given suggests the government imposes higher import duties on imported goods that aren’t subject to our level of environmental taxes. Also, exports will be exempted from the carbon tax.

The imposition of higher import duties and exempting exports from the carbon tax fits into the definition of a border tax adjustment. Exported products are exempted from the carbon tax and imported products are charged with higher import duties, presumably for the equivalent Australian products. The result of a border tax adjustment should be to charge the equivalent of the tax on imports as well as to compensate exports for the tax they face in Australia. Therefore, the government’s proposed changes seem to fit the definition of a border tax adjustment. However, Australia also has to ensure any border tax adjustments they impose are consistent with their World Trade Organisation’s obligations.

Firstly, border tax adjustments only adjust taxes. That means that if the Australian government were to propose a scheme to charge companies according to how much carbon emissions they produce, there are no provisions for a border tax adjustment. However, the scenario in this case clearly deals with increasing import duties on imported goods and exempting exports from the tax. Hence, it is not a breach in Australia’s obligations to the World Trade Organisation.

The aim of a border tax adjustment is to ensure an even playing field for all parties involved....