Carbon leakage - The first mover disadvantage: Australia's trade-related assistance measures for emissions-intensive, trade-exposed industries

As developed countries adopt climate change mitigation measures ahead of others, they fear 'carbon leakage': relocation of their emissions-intensive trade-exposed (EITE) industries to countries without climate regimes. The Australian Government will provide a percentage of emission allowances for free to eligible EITE industries under its emissions trading scheme. This article examines the compatibility of these measures with Australia's obligations under the General Agreement on Tariffs and Trade and Agreement on Subsidies and Countervailing Measures. Ultimately, these measures are held likely to be consistent with World Trade Organization rules, proving that the 'first mover' disadvantage of carbon leakage can be overcome.