Ahmad Lashkaripour(@ALashkaripour):5/ However, linking WTO membership to carbon pricing commitments is complicated. Carbon pricing creates distributive externalities that disrupt the terms of trade. So, adding carbon pricing disrupts the delicate balance of trade concessions under the WTO. And the direction of these externalities depends on how carbon is taxed. – With a demand-side tax, levied where fuel is burned, the balance is shifted against energy exporters like Saudi Arabia and Russia. – With a supply-side tax, levied where fuel is extracted, the direction flips: Saudi Arabia and Russia gain, while countries that rely more heavily on energy imports, like Japan, Korea and India, lose.

2026.10.07 14:06

5/ However, linking WTO membership to carbon pricing commitments is complicated. Carbon pricing creates distributive externalities that disrupt the terms of trade. So, adding carbon pricing disrupts the delicate balance of trade concessions under the WTO. And the direction of these externalities depends on how carbon is taxed. – With a demand-side tax, levied where fuel is burned, the balance is shifted against energy exporters like Saudi Arabia and Russia. – With a supply-side tax, levied where fuel is extracted, the direction flips: Saudi Arabia and Russia gain, while countries that rely more heavily on energy imports, like Japan, Korea and India, lose.

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