Countervailing a Hidden Subsidy: The U.S. Failure to Require Greenhouse Gas Emission Reductions

• Published in: Georgetown international environmental law review Vol. 19; no. 1; p. 83
• Main Author: Wolf, Liana G T
• Format: Journal Article
• Language: English
• Published: Washington Georgetown University Law Center 01.10.2006
• Subjects: Agreements; Carbon; Climate change; Cooperation; Costs; Countervailing duties; Emissions; Emissions control; Energy industry; Environmental policy; Global warming; Greenhouse effect; Greenhouse gases; International law; Kyoto Protocol; Production costs; Subsidies; United States > US; Europe
• ISSN: 2380-1905

Under the United Nations Framework Convention on Climate Change, the United States agreed to adopt national policies for greenhouse gas emission reductions, but the U.S. government has failed to follow through with any action. This note proposes that the failure of the U.S. government to impose the costs of reducing greenhouse gas emissions on its energy intensive industries constitutes a hidden subsidy which gives U.S. companies an unfair competitive advantage in the global marketplace. In particular, this paper focuses on the relationship between the United States and the European Union. Since energy intensive industries in the EU feel the higher costs of operating under carbon constraints, this note suggests the EU could use the Agreement on Subsidies and Countervailing Measures (SCM Agreement) to subject the subsidized U.S. products to countervailing duties. This note reviews existing WTO law to determine whether or not the SCM Agreement, as it is currently written, supports a case against the United States. The normative argument is then advanced that the SCM Agreement should support an action against the United States even if it requires amending the language of the SCM Agreement. This could encourage the United States to internalize its environmental costs that have transboundary effects. [PUBLICATION ABSTRACT]