Coming Soon: Global Warming Trade Wars

|

The Wall Street Journal reports that Energy Secretary Steven Chu is proposing tariffs on goods from countries that do not ration carbon:

tariff poster

Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a "weapon" to protect U.S. manufacturing, just a day after one of China's top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.

Mr. Chu, speaking before a House science panel, said establishing a carbon tariff would help "level the playing field" if other countries haven't imposed greenhouse-gas-reduction mandates similar to the one President Barack Obama plans to implement over the next couple of years. It is the first time the Obama administration has made public its view on the issue.

"If other countries don't impose a cost on carbon, then we will be at a disadvantage…[and] we would look at considering perhaps duties that would offset that cost," Mr. Chu said.

Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, told Dow Jones Newswires Monday that a carbon tariff would be a "disaster," would prompt a trade war and wouldn't be legal under World Trade Organization agreements.

Not surprisingly, the one area of the world that has already imposed restrictions on carbon dioxide emissions is also considering this idea. Reason foresaw the advent of global warming trade wars some years ago. For example, in one of my 2006 dispatches from the UN Climate Change Conference in Nairobi, I reported:

If Europe does go it alone with its carbon market, Europe's manufacturers will argue that they can't compete with foreign companies that don't have to pay for their carbon. Already the European Commission has convened a High Level Group to consider imposing border taxes to level the playing field…. such countervailing CO2 import tariffs could be compatible with World Trade Organization rules. [Why?] … after the United States banned ozone depleting chemicals in the 1970s, it began imposing tariffs on such imports and no one objected that it violated free trade rules.

Of course, comparatively few countries manufactured chlorofluorocarbons, whereas all emit carbon dioxide.