EU trade chief-designate rejects carbon border tariffs

I don't think that's the right approach myself, Karel de Gucht told members of the European Parliament, which will vote whether to approve the European Commission line-up on January 26. It's an approach that will run into many practical problems.

Europe has pledged to cut its emissions of carbon dioxide, which are blamed for climate change, to a fifth below 1990 levels over the next decade.

But manufacturers worry that the cost of cleaning up factories and power-generators will make their products more expensive and less attractive than cheap imports from rivals in India and China.

Some politicians, particularly in France, have said that imposing carbon tariffs on goods from carbon-intensive manufacturing regions would level out the playing field.

The big risk is that there will be slippage into a trade war with people outbidding each other on such measures, said De Gucht. He called on politicians to stay within market laws while protecting the environment.

He also told the European Parliament he supported the abolition of tariffs on environmental goods, such as wind turbines and solar panels, but did not envisage an agreement on the issue at the World Trade Organization.

De Gucht, who is Belgian, promised to try to convene a coalition of countries to eradicate taxes on green goods as part of the global fight against climate change.

In another hearing in the European Parliament, Algirdas Semeta, the nominee for tax commissioner in the new EU executive, underlined the importance of pushing through new rules on energy taxation within the EU.

The energy taxation directive will be one of my first priorities in my future job, Semeta said. I think in the future if we would move forward with green taxation it would allow us to decrease taxation on labor.

If approved by parliament, Semeta's team would write the new energy taxation rules from scratch. But they are likely to lean heavily on a draft prepared by his predecessor that was never completed. It proposed taxing fuels according to their carbon content.

(Reporting by Pete Harrison, Darren Ennis and John O'Donnell; editing by William Hardy)