EU aviation carbon spat seen unlikely to reach WTO

Reuters News
Posted: Jun 11, 2012 3:35 PM
EU aviation carbon spat seen unlikely to reach WTO

COLOGNE, Germany (Reuters) - Countries that oppose the European Union's move to include airlines in its scheme to control carbon emissions would find it difficult to bring a dispute to the World Trade Organization (WTO), an official with the global trade body said on Friday.

China and India have boycotted their airlines from taking part, raising the prospect of a potential trade war over the carbon scheme, which forces all flights to and from EU airports to limit carbon dioxide emissions and airlines to cover the cost of emissions over the limit.

The options for a trade dispute to be taken up at the WTO are limited, however, and it would take a clever lawyer to come up with a good case, Doaa Abdel-Motaal, a counselor in the WTO's office of the director general, told a carbon market conference in Cologne.

For instance, a case may be made if there is proof that the EU carbon scheme has a negative impact on tourism or adds to the cost of transporting cargo, she said.

"There are possible avenues out there, but the avenues are not multiple," she said, pointing out that to date no cases have been brought to the WTO.

When people ask whether the dispute is likely to go to the WTO, she said, "I would say the question really lies on the feasibility of bringing this dispute to the WTO. Are the rules really there, question mark?"

The legal dispute concerns whether the EU exceeds its jurisdiction by calculating the carbon cost over an entire whole flight, not just Europe.

Europe's highest court, the European Court of Justice, last year ruled that EU was fully within the law in seeking to impose carbon costs on international flights, dismissing a legal challenge brought by a group of U.S. airlines.

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The EU maintains it was driven to act after more than a decade of inaction at the U.N.'s International Civil Aviation Organization, which has yet to find a global solution to tackling airline emissions.

EU law allows for equivalent measures by other countries to be taken into account, such as a domestic cap-and-trade scheme, a carbon tax or other policy to tackle aviation emissions.

Asked whether any possible compromises were in the works, Jos Delbeke, the EU director general for Climate Action, said in an email: "We are discussing with many countries, including China and India."

(Reporting by Jeff Coelho, editing by Jane Baird)