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U.S. warned against carbon border tax

April 21, 2009 at 7:33 PM

NEW YORK, April 21 (UPI) -- A top-level Chinese government adviser Tuesday suggested the United States should be wary of invoking a carbon border tax.

Tung Chee-hwa, vice chairman of the Chinese People's Political Consultative Conference, told an audience at New York University a bill now before the U.S. Congress "smells of protectionism," The Financial Times reported. He warned it could lead to retaliation from developing countries, the British business newspaper said.

Tung said if the program moves forward it could be challenged through the World Trade Organization.

The bill aims to fight global warming with a green house gas emissions cap and trade program. Companies would be eligible for rebates to compensate for costs they incur. More controversially, the federal government would be able to levy import taxes on foreign manufacturers to cover carbon contained in products shipped into the United States.

"This is particularly unfair to China," said Tung, who was chief executive of Hong Kong from 1997 until 2005.

But U.S. Energy Secretary Steven Chu told Congress last month a carbon border tax would help "level the playing field" with countries with looser carbon standards.

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