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Thanks for this. I find that leakage very likely - and it seems obvious that one of the things that make China cheaper is the lower cost of enforcement of rules on security and pollution (there may be other costs associated iwht bureacracy and corruption, but that one certainly palys in favor of China).

As to cement and steel, there is the small thing that these goods are very heavy and extremely expensive to transport over long distances - thus made mostly locally everywhere, with a few exceptions for highly specialised goods. Heck, cement is still made right in the middle of Paris (right under my windows) - on the banks of the river.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Dec 23rd, 2005 at 05:25:23 PM EST
Well, there's an easy way to solve it: whack a carbon tax or emissions permit liability on imported goods from non-Kyoto compliant regimes.  That way the externality is removed, and the market will operate at its proper price.

(Unfortunately, the NZ government just gutlessly bowed to pressure from the business and farming sectors and canned its proposed carbon tax.  They still claim they will meet our Kyoto obligations - but with two years to go and no policy, it's difficult to see how).

by IdiotSavant on Fri Dec 23rd, 2005 at 06:06:17 PM EST
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Just tax land use, extractive industries, energy, fossil fuels, agriculture and fisheries, and reduce income and capital taxes accordingly.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Fri Dec 23rd, 2005 at 06:59:49 PM EST
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Yes, tax rent i.e. things that are more expensive just because they are physically rarer (and the demand for which will not be less because of the tax). Stirling Newberry has written some interesting diaries about this.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Dec 24th, 2005 at 03:51:54 AM EST
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Indeed. I guess we're going to have to get used to tainted science within the Kyoto protocol now, as well as from the denial factions.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 25th, 2005 at 07:49:22 AM EST
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