News Analysis: EU emission tax threatens to trigger aviation trade war

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The European Union (EU)'s newly-introduced Emission Trading System (ETS) might trigger trade rows between major economies, experts warned here on Thursday.

According to Chris Goater, spokesperson of International Air Transport Association (IATA), the U.S. Senate is mulling over a bill that would direct U.S. Department of Transportation (DOT) to prohibit U.S. airlines from participating in the ETS.

A similar bill was already passed by the U.S. House of Representatives.

The Senate's bill, if passed, would merge with the House' bill into one and would be presented to the president, Goater told Xinhua.

"Assuming the President signed the bill into law, it potentially sets up a contest of wills between the U.S. and EU, with U.S. airlines in the middle," he said.

In the meantime, China Air Transport Association also said that its members would not cooperate with the ETS, whilst India too signaled intentions to sabotage EU's effort.

"This is no longer an environmental debate, it's a political debate," continued Victoria Moore, gerneral manager for communications of the Association of European Airlines.

RETALIATIONS AND WORRIES

"The U.S. has noted that more than 43 countries have indicated their opposition to aviation's inclusion into the EU's ETS," said Goater.

"There are still a lot of anxious and upset countries who really want to push this further. So, we could still see further retaliation, we could still see further court cases," he warned.

In December 2011, U.S. Secretary of State Hillary Rodham Clinton sent a letter to several European Commission officials threatening to take "appropriate action" if the EU did not back down on its decision.

IATA is calling for all sides to negotiate at the International Civil Aviation Organization (ICAO), which is working on a framework for a global scheme for addressing aviation carbon emissions.

"One single global scheme is needed to effectively tackle emissions and help aviation reach its goals of carbon neutral growth from 2020, and a 50-percent reduction in carbon emissions by 2050 compared to 2005 levels," Goater said.

The EU, in the meantime, stood firm in upholding its decisions.

"The EU will just continue with the implementation of the legislation and we only expect all countries to respect our legislation," EU Climate Action Commissioner's spokesperson Isaac Valero Ladron told Xinhua.

In fact, the EU is planning to extend the ETS to other sectors of transportation such as shipping.

"After long years of inaction at international level, the EU will address shipping emissions next year. We have not yet decided whether this will be under the ETS or we will impose a levy or a bunker fuel," Ladron said.

Source: Xinhua