ABSTRACT
Border adjustments (export rebates, import taxes) to offset international differences in environmental control costs are analyzed. The paper first notes conflicting national and international policy developments concerning border adjustments. After examining the international economic consequences of environmental control costs, the paper argues that border adjustments would subvert environmental objectives, distort international trade, probably violate GATT obligations, and present extraordinary administrative problems. Reliance on alternative policies, including exchange rate adjustments and compliance with OECD principles, is preferable.
