Free Markets, Free People

How to start a trade war in one easy step

Decide, as the EU has, to unilaterally impose a carbon tax on airlines and watch what happens:

China has warned the European Union to abandon its controversial carbon tax on airlines or risk provoking a global trade war. Adding weight to the warning, an industry insider told the Financial Times that the Chinese government was seriously considering measures to hit back at the EU if it insists on charging international airlines for their carbon emissions. –Simon Rabinovitch, Financial Times, 22 December 2011

The US has threatened to take retaliatory action against the European Union unless Brussels drops its plan imminently to start charging any airline flying into the bloc for its carbon pollution. In a sharp escalation of tensions over Brussels’ move to bring aviation into its emissions trading system from January 1, Hilary Clinton, US Secretary of State, has written to her European Commission counterpart, Catherine Ashton, and other top commissioners, to “strongly urge” the EU to halt or suspend its plan. –Pilita Clark and Andrew Parker, Financial Times, 20 December 2011

The Indian government has asked the country’s airlines to refrain from submitting carbon emissions data to the European Union (EU) for a new tax that will become applicable from 1 January for flights to Europe, hardening its stand further against the imposition of the levy. — Tarun Shukla, Live Mint, 18 December 2011

The EU is already in financial trouble and now it wants to compound that problem by something as silly as a carbon tax to support a very specious premise concerning global warming.  It’s all about agenda politics and its timing couldn’t be worse given the financial crisis in the EU.  This is either EU stupidity or simply bureaucratic inertia, but in either case, the stances taken by the US, China and India are not particularly “mild”.  The attempt to impose the tax on January 1st could cause quite an uproar and a suspension of flights into the EU until the outcry makes them back off.   And, of course, it won’t be the airlines who pay the tax, will it?  It will be their customers. 

The EU has more problems than it can handle now.  Starting a trade war over a carbon tax would be the cherry on top of the “stupid” sundae.  But then, for years and contrary to logic, they thought “other people’s money” would never run out, didn’t they?


Twitter: @McQandO

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9 Responses to How to start a trade war in one easy step

  • “This is either EU stupidity or simply bureaucratic inertia”

    Or, as with lightbulb bans, a way for various cronies to get some more money and power. Smaller airlines are already in trouble. A carbon tax will not raise business for the small guys and a trade-war that gets them less access to international routes will weaken them nicely for the likes of Lufthansa or Air France to takeover.

    • @DocD I think you hit the nail on the head. The eviro-loonies are just being used by the very big industry they hate.

  • Could be a helluva boon to some near-Europe, independent-minded nation…say Ireland or GB.

    All of the foreign carriers could be invited to land there, carbon-tax free. Then the traveler would have a choice between sea or air, as the subsidized “flag carriers” took them on to European destinations.

    Be a big boost to teleconferencing, too. Downer for European business competitiveness though. Oh, well…can’t save a planet/milk the traveling public/funnel money into BIG GOVERNMENT without breaking a few eggs…

  • Anyone have any ideas how China would retaliate? Just curious?

  • I don’t get it. If they tax all airlines the same, its not really damaging to foreigners only like a tariff on imports.

    • @Harun I’m guessing the concern is that this raises the cost of doing business in favor of local businesses who would consume less fuel. If it is only on air passengers, I don’t think it would be that big a deal. If its air cargo then maybe. Even then, that’s gotta be a small slice of cargo transport vs. rail/sea.

    • @Harun Well. consider this. The carbon tax does not seem to be on the portion of the flight over the EU, but on the total length of the flight. So, on a flight from Beijing to London, most of the flight is not over the EU, but the tax is paid to the EU based on the total length of the flight. Hence, the EU is taxing China for the part of flight over…China.