U.S., Europe Gird for 'Carbon Trade War'?

The European Union is setting off a confrontation with outside nations —
including the United States — by demanding that all airlines pay a carbon tax
when crossing EU airspace and landing at EU airports.

"The new EU system is portentous. It is an extension of the continent's
cap-and-trade system from domestic sources to the international arena,"
according to Claude Barfield, resident scholar at the American Enterprise
Institute (AEI).

"Though other nations protested as the rules were being formulated, the new
legislation went into effect on January 1, 2012" and the tax will start being
collected in 2013.

Significantly, the tax based on carbon emissions will be levied not just on
the miles flown in EU airspace, but for the entire length of an aircraft's
flight, Barfield reveals in an article headlined "The First Carbon Trade War?"
in The American, the journal of the AEI.

That means a Korean Air jet, for instance, will have to pay a tax based not
on the few hundred miles it flies over the EU but over the entire trip of
several thousand miles from Korea to Europe.

The 27-member EU's action has produced threats of retaliation. More than 20
nations, including the United States, China, Russia, India, Brazil, and South
Africa, have met twice to discuss responses.