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Sebastian Mallaby on 'Green Tariffs'

Interviewee: Sebastian Mallaby, Director, Center for Geoeconomic Studies, CFR
Interviewer: Lee Hudson Teslik, Assistant Editor, CFR.org
March 7, 2008

Sebastian Mallaby, the director of CFR’s Center for Geoeconomic Studies, says the next U.S. president should consider the possible effects of “green tariffs” on the welfare of the World Trade Organization (WTO). Mallaby broaches the possibility that a U.S. cap-and-trade system aimed at mitigating greenhouse gases could lead to a push for broad tariffs—“green tariffs”—aimed at punishing importers of steel or cement who do not follow rules on greenhouse gas emissions. Disputes over such measures could wind up at the World Trade Organization, Mallaby says.

If the next U.S. administration decides to ignore rulings that run counter to its policy, that in turn could undermine the WTO’s dispute settlement system and its tribunals. “There’s a threat there to the legitimacy of the World Trade Organization,” Mallaby says. “Because global trade does function best when you can have rules that can be resolved by these kind of tribunals, that is a threat to what we’ve achieved, and that is where we need to focus.” He adds that preserving the current dispute settlement framework should take precedence over pressing a new multilateral trade deal through the Doha round of WTO talks.

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