Just last week Russia lodged its first ever complaint with the World Trade Organisation, claiming that the EU was in violation of anti-dumping provisions of the WTO agreement.  The issue stems from an ‘energy adjustment’ imposed by the EU in 2002 on Russian exports of steel and fertiliser products. Russia claims that in its application of the adjustment the EU is able to give its domestic producers an unfair competitive advantage, costing Russia hundreds of millions of Euros each year in lost opportunity.  The EU’s response will be based around the argument that as European steel and fertiliser manufacturers are subject to stricter energy based regulation, then the cost of Russian products will be unfairly cheaper and environmentally damaging and should be restricted in order to level the playing field, both in the market place and for the sake of the environment.  Put simply, Russian steel is cheaper because they can pollute the skies and should be disqualified from the Euro market.  This is rampant protectionism and should be resisted, but it is no surprise.

The EU regularly uses the principle of ‘common ownership’ of the environment as a trade and revenue weapon.  ‘Common ownership’ means that every country shares in the environment, and therefore must share the cost of looking after it.  Calling upon this principle, the EU made the claim for a carbon tax for all flights inside and into Europe, and stated that the whole of the flight should be taken into emissions consideration, and tried to incorporate, and therefore tax, Chinese owned aircraft flying over Chinese sovereign territory for its carbon liability.  Dressed as environmental protection, the EU was seeking to disadvantage international carriers bringing imports into the EU, and thus support the domestic industrial and agricultural producers because they fly shorter distances, or more likely use the rail and road networks.  Once China decided to cancel its orders for the new Airbus, the EU backed down, but stalled rather than cancelled the proposed carbon tax. (Actually the airlines Aviation Emissions Trading System applied to all foreign carriers over their own airspace, but I chose the Chinese example as the most blatant)

In a similar fashion, the EU is proposing the inclusion of shipping into a similar system which will give EU farmers and industrials similar advantages over foreign production that is sea freighted.

The environment is a very powerful weapon to use, because it will enjoy broad appeal.  Environmental concerns will cross most political lines.  The elite can lay claim to be acting in the interests of future generations.  A very hard argument to fight.  The reality is, as I have illustrated above, environmental legislation within the EU has little to do with nature, and much more to do with creating non-tariff barriers.  Soon every import will be subject to a form of carbon-importation tax and the EU will claim it is all in the name of protecting the planet, but the reality is that it is all about protecting European producers from competition.

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