Scott Morrison – Australia to fight Boris Johnson’s green tariff bid
Carbon tariffs are a tax on energy-intensive imports that continue to trigger heated international debates. The European Union, frustrated by global inaction on emissions reduction, has advocated for them to be applied on imported goods – such as aluminium, steel and chemicals – that are produced in countries with weaker climate laws. It has already committed to a carbon border tax by 2023, which is likely to hit products made with Australian raw materials.
Mr Biden could also impose climate tariffs, with his “Buy American” economic plan endorsing a “carbon adjustment fee” at the border.
Senior Australian government sources, who are not authorised to speak publicly, confirmed it would resist Britain and the EU’s efforts to encourage countries to adopt new taxes to capture imports from carbon-price-free jurisdictions such as Australia. They see the attempts by Britain and the EU to impose carbon tariffs as undermining the free trade deals Australia is currently negotiating with them.
The Morrison government will argue carbon tariffs are not aimed at combating climate change, but rather at economic objectives including protecting local industries such as British and European meat, cheese and wine.
Trade Minister Dan Tehan has previously labelled carbon tariffs as “a new form of protectionism”.
Asked whether Britain’s climate stance was proving to be an issue in the trade negotiations, Mr Tehan said “our discussions with the UK on the text of our free trade agreement are ongoing”.
“Australia and the UK are focused on securing the best possible trade outcomes for our exporters and businesses in the FTA,” he said.
“Our commitment to meeting our Paris targets is firm, absolute and resolute.”
Craig Emerson, a former Labor trade minister and now business consultant, said carbon tariffs were “coming at us like a locomotive and we need to recognise that it’s coming down the track and it’s gathered a lot of speed and momentum”.
Dr Emerson said the EU and Britain were advanced in plans to apply the levies and the Biden administration would likely follow. He said carbon tariffs would not amount to protectionism and would be compliant with the World Trade Organisation’s rules if they were set at the correct rate.
“You have to design the mechanisms and set a rate so that it is sufficient to avoid carbon leakage, while not being in excess of that level which could constitute a form of protectionism and be non-compliant with WTO obligations,” Dr Emerson said.
Trade expert Alan Oxley, principal of ITS Global, said he did not believe carbon tariffs would become a mainstream part of international trade and development.
“It is Boris who has really been carrying it but it just shows you he does not have a proper grasp of what the proper frameworks are in trade policy,” he said.
”Trade agreements are underpinned by legally bound principles and measures and for a new country to succeed in an arrangement … they’ve still got to be within the legal structure.“
Australia and Britain are in the early rounds of negotiating a trade agreement, with Mr Morrison and Mr Tehan wanting to push back against any attempt to insert penalties or compliance mechanisms on climate into the deal, according to senior sources familiar with the negotiations.
Britain has made it a strategic objective of trade policy to secure provisions that support and help further its commitments on climate change, and in particular achieving net-zero carbon emissions by 2050.
In its Brexit agreement with the EU, signed in late December, both parties reaffirmed “its ambition of achieving economy-wide climate neutrality by 2050”.
It was the first trade agreement ever to feature climate targets in this way. The deal’s fine print also dictated that not taking sufficient action to reach net-zero would be in direct breach of the trade agreement.
Britain wants to use its deal with Australia to promote trade in low carbon goods and services, supporting research and development collaboration and maintaining both parties’ right to regulate in pursuit of decarbonisation, as well as reaffirming their respective commitments to the United Nations Framework Convention on Climate Change and the Paris Agreement.
A federal government source with knowledge of the negotiations said Australia’s approach aimed to include commitments that were consistent with internationally agreed principles, standards and rules that have a clear link to trade, while noting that Australia and the UK shares high standards on environmental protection.
The Australian government is also in the later stages of clinching a trade deal with the EU, which it hopes to finalise before the end of the year.
with Latika Bourke
Rob Harris is the National Affairs Editor for The Sydney Morning Herald and The Age, based at Parliament House in Canberra
Anthony is foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.