The U.S. Senate vs. the Developing World

Developments over the last few days highlight what appears to be an expanding rift between the United States and the rest of the world (minus France) on the issue of "carbon tariffs." To keep everyone up to speed, carbon tariffs (aka "border measures" or "border adjustments" or "offset measures" or... you get the idea) are measures intended to offset the competitive disadvantages that climate change mitigation policies have on domestic manufacturers by imposing at the border a "charge" (or "tax" or "tariff" or "adjustment" or...) on imports of like products from countries that have chosen not to burden their manufacturers with such regulations.

As I've noted repeatedly, much of the developed and developing world has publicly opposed the unilateral use of carbon tariffs due to fears that such measures are utterly unmanageable, could easily devolve into "green protectionism" (i.e., a "green" excuse to keep imports out, regardless of the actual climate change facts), and/or spark a global trade war. And lots of studies support their views.  The Chinese have been one of the most vocal opponents and, as Reuters reports, just yesterday reiterated their stance against carbon tariffs and (again) issued a harsh warning to other nations contemplating their use:

China's official news agency has denounced proposals for "carbon tariffs" on goods from big greenhouse gas emitting countries, saying on Friday that the idea could trigger trade battles with poor countries....

China, the world's biggest emitter of greenhouse gases and an exporting giant, has denounced the idea before, and its Xinhua news agency pressed that opposition in a commentary issued before key climate change negotiations open in Copenhagen on Monday.

"The carbon tariffs proposed by some developed countries are quite likely to trigger a trade war and spark boycotts from developing countries," said the Xinhua commentary, adding that rich nations had failed to act on their own vows to cut emissions and give more help to poor countries to fight global warming.

"Some developed countries have made a wrong decision. They are practicing trade protectionism under a disguised pretext," said Pan Jiahua, a climate policy expert who has advised the Chinese government, according to the commentary....

The Xinhua commentary underscored China's fears that the United States, European Union and other rich economies could slow the flow of goods from it and other developing countries in the name of environmental protection....

The Xinhua commentary said such measures would violate World Trade Organization rules. Experts have said some border adjustment measures would be permissible under WTO rules.

"The true motive of developed countries' carbon tariffs proposal is to protect domestic industries, which have suffered during the global financial crisis," said Xinhua.

As the article mentions, China's stance is nothing new, and the timing of this latest warning is obviously intended to remove any doubt about the country's position on the controversial issue during next week's Copenhagen talks. And you can't really blame the Chinese - whose products are routinely hit by supposedly "remedial" tariffs under US trade laws that can approach 100%(!) - for worrying that remedial carbon tariffs would be dictated by domestic politics and in no way reflect the actual "remedy" (a leveling of cost-competitiveness) intended by any US climate change law.  Other countries have similar fears, and rightly so: the lobbying in the US and EU has already begun, and we don't even have a law yet!

Speaking of other countries, we also saw this week that India has again rejected a hard cap on carbon emissions. This isn't actually "news," as it's been India's position all along.  But I wonder if it will end up being important in the context of carbon tariffs. For example, would anyone be surprised to see certain protectionist elements use India's and other developing countries' refusal to cap their emissions as the perfect excuse to demand carbon tariffs, regardless of the countries' other commitments? I sure wouldn't.

Unfortunately, it seems that a growing bloc of the US Senate is unconcerned with what the "rest of the world" thinks. As BNA (subscription) reported yesterday: