The Europeans try to Shake Down the World with their Emission Trading Scheme but China, Russia, India and the US fight Back

Posted by PITHOCRATES - March 18th, 2012

Week in Review

The European Union thought that they had struck gold.  Their little Emission Trading Scheme.  Which would force foreign governments to fund a large portion of their chronic budget deficits.  By forcing them to buy permits to emit carbon in their airspace.  As well as other nations ‘ airspace.  Even in airspace over the high seas.  A bold scheme their Emission Trading Scheme.  Though not strictly legal.  And requiring a submissive airline industry that has no problem saying “make me your bitch” to the Europeans.   Which doesn’t look to be the case (see U.S. sides with China against airlines emissions tax by Tim Devaney posted 3/15/2012 on The Washington Times).

The European Union’s plan to impose a tax on international airlines for their carbon emissions has run into fierce head winds, with the Obama administration joining China, India and other powers in a growing global drive to force the EU to back down…

“It’s a tricky one: Fight a trade war with the entire world, or back down,” said Richard Aboulafia, vice president of analysis at Virginia-based Teal Group. “I’m thinking they’re going to back down.”

China is one of the biggest opponents of the plan, which would tax airlines for their carbon outputs for flights to or from Europe. The controversial part of the tax, which has drawn complaints that the fee is illegal under international trade law, is that it is assessed based on the entirety of the flight distance, not just the part spent over European airspace.

Hitting back at Europe where it counts, China has canceled plans to purchase 55 jets worth $14 billion from Airbus.

On Thursday, it suspended a purchase of 10 Airbus A330s, a move made just days after Airbus complained to European politicians about China having put off buying 10 A380 superjumbos and 35 A330s.

China and Russia have said their airlines will not comply with the emissions charge, which could keep their carriers from traveling to Europe altogether. Congress has considered a similar measure.

At a meeting last month in Moscow, almost 30 countries adopted a resolution threatening Europe with eight forms of retaliation they would consider if the charge is not scrapped. Among those measures are bringing legal cases before international trade forums, not granting European carriers landing rights and routes, and new levies against EU national airlines…

Airlines aren’t necessarily opposed to paying for their emissions in European airspace, which is unquestionably under EU jurisdiction, but chafe at being charged for emissions over other parts of the world. For example, European airspace takes up only 9 percent of a flight from San Francisco to London, according to Airlines for America. The rest is over the U.S., Canada and the high seas, but airlines would be charged for the entire 5,371-mile trip.

Money talks and a silly Emission Trading Scheme walks.  Or soon will.  Unless the Europeans want to take on the whole world.  Plunging the international economy into a trade war.  Could they be so arrogant?  Well that’s a silly question.  Of course they can be.  But will they put their silly environmentalism where their economies are?  And do they think the world is so ignorant not to see that this is just a way to get others to pay for their chronic budget deficits?  The world is betting they’re not.  And will back down.  Which they’d be wise to do.  For if they thought they had deficit problems before an international trade war directed at them they ain’t seen nothing yet.

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