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M. P. Ramos and O. O. Chisari
rest of the world magnifies the reduction of the domestic activity. They find that the
presence of an alternative cleaner technology, which competes with the incumbent
technology, helps to reduce the costs in a significant way since it is not too demanding
on foreign resources. Therefore, the less stress a low-emission technology exerts on
the external accounts of an economy, the likelier it will be voluntarily adopted.
Argentina has a similar production and trade pattern to that of Australia, so the
conclusions reached by Fraser and Waschik (2013) concerning economic dividends
dependent on carbon tax bases in Australia could be useful to design an ETR in
similar economies, such as Argentina. They confirm the conclusion by Bento and
Jacobsen (2007): the higher the participation of specific factors in carbon-intensive
sectors, the greater the double dividend (lower GHG emissions and greater welfare)
when a carbon tax is applied. This assumption is realistic in energy sectors where
sunk-specific capital prevails. Environmental and welfare dividends become stronger
when the tax base is on production and not on the end-use because of the paththrough difference in the price change. Trade balance and carbon leakage are also
highlighted as other spillover effects of the carbon tax applied to different tax bases.
The production tax base reduces exports of carbon-intensive sectors but incentivises
the consumption of carbon-intensive imported goods, leading to potential leakage
increases. In contrast, the consumption tax base of a carbon tax reduces the demand
of carbon-intensive goods (domestic and imported), leading to a potential reduction
in production because of a lower domestic demand and an increase in exports, which
are generally lower than domestic sales because of the Armington assumption on
preferences. To avoid the overestimation of the carbon leakage results, it is necessary to allow for technological innovation and its positive spillover effects on the
CC modelling. This conclusion is also theoretically and empirically (Switzerland)
supported by Karydas and Zhang (2017), who demonstrate that, in the long run, a
carbon tax could lead to the development of the R&D sector, resulting in technological change and, thus, an endogenous green growth. Additionally, Fraser and Waschik
(2013) consider an ETR that also includes a tariff reform when carbon leakage really
arises as a consequence of the application of a carbon tax. In that case, it would be
necessary to address this issue through border trade policies, such as greater tariffs
on carbon-intensive goods.
In line with the previous idea, some joint trade and environmental negotiations
look for environmental and external dividends. However, as evidenced, the addition
of growth and socio-economic dividends (lower unemployment and poverty) seems
to be very challenging goals for developing countries.
Other types of ETR scenarios linked to more pragmatic trade policies appear in the
context of Environmental Goods and Services Negotiations, either in multilateral (the
Doha Round) or in plurilateral (e.g. APEC) negotiations. For instance, these ETRs
seek to increase relative prices of energy-intensive and polluting goods, through the
increase in their tariffs (Fontagné and Fouré 2016a, b), the reduction of the export
rebates related to these products (Fan et al. 2015) or else the reduction of tariffs on
environmentally preferable products (Gozlan and Ramos 2008) or on low energyintensive goods (Ramos 2014; Ramos et al. 2017). These trade policies appear as
M. P. Ramos and O. O. Chisari
rest of the world magnifies the reduction of the domestic activity. They find that the
presence of an alternative cleaner technology, which competes with the incumbent
technology, helps to reduce the costs in a significant way since it is not too demanding
on foreign resources. Therefore, the less stress a low-emission technology exerts on
the external accounts of an economy, the likelier it will be voluntarily adopted.
Argentina has a similar production and trade pattern to that of Australia, so the
conclusions reached by Fraser and Waschik (2013) concerning economic dividends
dependent on carbon tax bases in Australia could be useful to design an ETR in
similar economies, such as Argentina. They confirm the conclusion by Bento and
Jacobsen (2007): the higher the participation of specific factors in carbon-intensive
sectors, the greater the double dividend (lower GHG emissions and greater welfare)
when a carbon tax is applied. This assumption is realistic in energy sectors where
sunk-specific capital prevails. Environmental and welfare dividends become stronger
when the tax base is on production and not on the end-use because of the paththrough difference in the price change. Trade balance and carbon leakage are also
highlighted as other spillover effects of the carbon tax applied to different tax bases.
The production tax base reduces exports of carbon-intensive sectors but incentivises
the consumption of carbon-intensive imported goods, leading to potential leakage
increases. In contrast, the consumption tax base of a carbon tax reduces the demand
of carbon-intensive goods (domestic and imported), leading to a potential reduction
in production because of a lower domestic demand and an increase in exports, which
are generally lower than domestic sales because of the Armington assumption on
preferences. To avoid the overestimation of the carbon leakage results, it is necessary to allow for technological innovation and its positive spillover effects on the
CC modelling. This conclusion is also theoretically and empirically (Switzerland)
supported by Karydas and Zhang (2017), who demonstrate that, in the long run, a
carbon tax could lead to the development of the R&D sector, resulting in technological change and, thus, an endogenous green growth. Additionally, Fraser and Waschik
(2013) consider an ETR that also includes a tariff reform when carbon leakage really
arises as a consequence of the application of a carbon tax. In that case, it would be
necessary to address this issue through border trade policies, such as greater tariffs
on carbon-intensive goods.
In line with the previous idea, some joint trade and environmental negotiations
look for environmental and external dividends. However, as evidenced, the addition
of growth and socio-economic dividends (lower unemployment and poverty) seems
to be very challenging goals for developing countries.
Other types of ETR scenarios linked to more pragmatic trade policies appear in the
context of Environmental Goods and Services Negotiations, either in multilateral (the
Doha Round) or in plurilateral (e.g. APEC) negotiations. For instance, these ETRs
seek to increase relative prices of energy-intensive and polluting goods, through the
increase in their tariffs (Fontagné and Fouré 2016a, b), the reduction of the export
rebates related to these products (Fan et al. 2015) or else the reduction of tariffs on
environmentally preferable products (Gozlan and Ramos 2008) or on low energyintensive goods (Ramos 2014; Ramos et al. 2017). These trade policies appear as