Because many nations participate in trade of GHG-intensive products with the United States, implementing border tax adjustments (BTAs) will require a significant, ongoing administrative effort. Based on decades of experience reporting GHG emissions from facilities, we believe the effort to be feasible. A key administrative challenge will be to allocate emissions from facilities to the GHG-intensive products they produce. In a companion Framework report, we describe procedures, based on a proposed GHG-index (GGI), to determine BTAs compatible with World Trade Organization (WTO) obligations. However, today, relevant, information and procedures are not yet available in an authorized form to determine BTAs, and no federal agency has the capacity or authority to implement BTAs.
- To administer BTAs, GHG tax legislation should designate and provide necessary authority to appropriate federal agencies. We recommend that the Treasury Department should lead with assistance from the Department of Commerce and the Environmental Protection Agency.
- Congress should establish principles to determine GHG-intensive products that would be covered by BTAs (based on a threshold for GGI).
- Because it will take time to build the necessary capacity, the program should be phased in, beginning with a prompt start based on available information covering the most important GHG-intensive products and nations, and later ramped up to full implementation as capacity grows and reliable information becomes available.
- Regulators will need to develop guidelines for covered facilities and operations to determine and allocate GHG emissions to the GHG-intensive products they produce.
- Collection of reliable information for products exported to the United States from many nations will be challenging. The report describes public sources that contain relevant information that could contribute to determination of GGI values by the regulator during initial start-up.
- Information submitted by firms to determine BTAs should be published by the regulator, and subject to audit and sanctions for incomplete, negligent, or fraudulent information.
- The regulator should publish information on export rebates and import charges.
- To promote continuous improvement and as a check on the validity of relevant information, procedures to implement BTAs should include appeals processes that allow domestic and foreign firms, trade associations and other designated entities to challenge US decisions on covered products and information used to determine export rebates and import charges.
- The report contains a list of essential administrative tasks in the United States and abroad for regulatory authorities, and an indicative list of GGI values for products in several sectors.