ABSTRACT
At a time when the international community is struggling to agree on a comprehensive, global effort to mitigate greenhouse gas (GHG) emissions, countries, primarily the developed ones, are planning to move unilaterally and explore and implement strategies that would curb local and global GHG emissions. However, from various discussions and debates, these strategies can also have important trade implications, and it becomes pertinent in this context to understand the possible consequences of such policies for global trade. Adoption of climate-mitigation measures by the developed nations and the consequent competitiveness concerns of industries particularly in developed nations have led to proposals for tariff or border tax adjustments (BTAs) to offset adverse impacts arising from domestic policies. At the same time it is perceived by developed countries that if developing countries do not join a post-2012 climate regime, emissions-intensive production units in developed countries may relocate to the developing nations (carbon leakage), which will undermine the global combat against climate change. The impacts of such border adjustment measures can be felt by a large number of industries in the developing countries who are not mandated by any GHG emission reduction.
