The way I see it, the major barrier to countries implementing carbon taxes is the fear their economic competitors won’t do the same, therefore hindering their economic growth needlessly. A valid concern.
Why don’t some nations build an ‘opt in’ style Free Trade Agreement that allows any country to join as long as they prove they have implemented and enforced a carbon tax. Those countries then have high financial incentives to only trade within the ‘carbon tax block’ and any country outside is at a serious trade disadvantage.
I’ve (quickly) looked and have not found anything like this proposed (which is frankly crazy).
Would you support your country jumping into this FTA?
What are the unforeseen downsides or objections to a plan like this?
What wound be the benefits of belonging to this free trade agreement?
Countries would still have economic competition from countries outside the free trade agreement, unless part of the agreement is actively restricting trade from countries not in the agreement.
Countries within the FTA obviously will not want their carbon taxed products competing with ‘polluted products’. This gives countries in the FTA an incentive to place tariffs on goods produced outside the FTA. This would make it difficult or expensive to export into the FTA if a country isn’t a member. The benefits are the access to the FTA markets (more or less).