Wednesday, 13 June 2012

EU emissions tax on airlines can spark trade war: IATA


Retaliation may be in the form of limiting over-flights, slowing orders for aircraft
Beijing, June 12:
The International Air Transport Association (IATA) warned on Tuesday that some countries may be on the brink of launching a retaliatory trade war against the decision of the European Union to include air travel in the emission trading scheme. The new scheme came into effect from January 1 this year.
“I think we are on the brink of something like that (retaliatory trade war) happening. There have been warning signs that states may be looking in terms of slowing down approvals for purchase of new aircraft from European manufacturers, to limiting the number of over-flights,” said Mr Paul Steele, IATA's Director, Aviation Environment.
IATA officials indicated that there were many different approaches that the 30 countries opposing the move may choose.
“We want to avoid that (retaliatory trade war) and are calling on all parties to get back on the table in the International Civil Aviation Organisation and hammer out a solution. We hope very much that some progress on that will be made in the next few months. It is an extremely charged situation right now,” Mr Steele added.
Global fight
India, China, Russia, and to some extent, the US are in the forefront of the global fight against the imposition of the EU Emission Trading Scheme.
The EU-ETS requires airlines flying into Europe to pay a carbon credit tax. What is angering the global governments is that the amount of tax that has to be paid is also measured for the portion of the flight that takes place outside Europe.
So, airlines from India will have to pay the tax from the time they start their engines in India till they land in Europe. IATA officials indicated that those opposed to the EU-ETS were looking to Europe to take some “tangible steps” back from the implementation plan as it stands right now.
They added that there were certain milestones which had to be viewed very carefully. “April 30, 2013 is when airlines are supposed to surrender emission permits to their competent authorities. In the international negotiations, the next big meeting is in September-October next year,” officials said.


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