Climate Change May Usher in a New Era of Trade Wars

Author: Yuvi January 25, 2023

Climate Change May Usher in a New Era of Trade Wars


WASHINGTON — Efforts to mitigate climate change are prompting countries across the world to embrace dramatically different policies toward industry and trade, bringing governments into conflict.

These new clashes over climate policy are straining international alliances and the global trading system, hinting at a future in which policies aimed at staving off environmental catastrophe could also result in more frequent cross-border trade wars.

In recent months, the United States and Europe have proposed or introduced subsidies, tariffs and other policies aimed at speeding up the green energy transition. Proponents of the measures say governments must move aggressively to expand sources of cleaner energy and penalize the biggest emitters of planet-warming gases if they hope to avert a global climate disaster.

But critics say these policies often put foreign countries and companies at a disadvantage, as governments subsidize their own industries or charge new tariffs on foreign products. The policies depart from a decades-long status quo in trade, in which the United States and Europe often joined forces through the World Trade Organization to try to knock down trade barriers and encourage countries to treat each other’s products more equally to boost global commerce.

Now, new policies are pitting close allies against each other and widening fractures in an already fragile system of global trade governance, as countries try to contend with the existential challenge of climate change.

“The climate crisis requires economic transformation at a scale and speed humanity has never attempted in our 5,000 years of written history,” said Todd N. Tucker, the director of industrial policy and trade at the Roosevelt Institute, who is an advocate for some of measure. “Unsurprisingly, a task of this magnitude will require a new policy tool kit.”

The current system of global trade funnels tens of millions of shipping containers stuffed with couches, clothing and car parts from foreign factories to the United States each year, often at astonishingly low prices. But the prices that consumers pay for these goods do not take into account the environmental harm generated by the far-off factories that make them, or by the container ships and cargo planes that carry them across the ocean.

American and European officials argue that more needs to be done to discourage trade in products made with more pollution or carbon emissions. And US officials believe they must lessen a dangerous dependence on China in particular for the materials needed to power the green energy transition, like solar panels and electric vehicle batteries.

The Biden administration is putting in place generous subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars and companies building new plants for solar and wind power equipment. Both the United States and Europe are introducing taxes and tariffs aimed at encouraging less environmentally harmful ways of producing goods.

Biden administration officials have expressed hopes that the climate transition could be a new opportunity for cooperation with allies. But so far, their initiatives seem to have mainly stirred controversy when the United States is already under attack for its response to recent trade rulings.

The administration has publicly flouted several decisions of World Trade Organization panels that ruled against the United States in trade disputes involving national security issues. In two separate announcements in December, the Office of the United States Trade Representative said it would not change its policies to abide by WTO decisions.

But the biggest source of contention has been new tax credits for clean energy equipment and vehicles made in North America that were part of a sweeping climate and health policy bill that President Biden signed into law last year. European officials have called the measure a “job killer” and expressed fears they will lose out to the United States on new investments in batteries, green hydrogen, steel and other industries. In response, European Union officials began outlining their own plan this month to subsidize green energy industries — a move that critics fear will plunge the world into a costly and inefficient “subsidy war.”

The United States and European Union have been searching for changes that could be made to mollify both sides before the US tax-credit rules are settled in March. But the Biden administration appears to have only limited ability to change some of the law’s provisions. Members of Congress say they intentionally worded the law to benefit American manufacturing.

European officials have suggested that they could bring a trade case at the World Trade Organization that could be a prelude to imposing tariffs on American products in retaliation.

Valdis Dombrovskis, the European commissioner for trade, said that the European Union was committed to finding solutions but that negotiations were needed to make progress or the European Union would face “even stronger calls” to respond.

“We need to follow the same rules of the game,” he said.

Anne Krueger, a former official at the International Monetary Fund and World Bank, said the potential pain of American subsidies on Japan, South Korea and allies in Europe was “enormous.”

“When you discriminate in favor of American companies and against the rest of the world, you’re hurting yourself and hurting others at the same time,” said Ms. Krueger, now a senior fellow at the School of Advanced International Studies at Johns Hopkins University.

But in a letter last week, a collection of prominent labor unions and environmental groups urged Mr. Biden to move forward with the plans without delays, saying outdated trade rules should not be used to undermine support for a new clean energy economy.

“It’s time to end this circular firing squad where countries threaten and, if successful, weaken or repeal one another’s climate measures through trade and investment agreements,” said Melinda St. Louis, the director of the Global Trade Watch for Public Citizen, one of the groups behind the letter.

Other recent climate policies have also spurred controversy. In mid-December, the European Union took a major step toward a new climate-focused trade policy as it reached a preliminary agreement to impose a new carbon tariff on certain imports. The so-called carbon border adjustment mechanism would apply to products from all countries that failed to take strict actions to cut their greenhouse gas emissions.

The move is aimed at ensuring that European companies that must follow strict environmental regulations are not put at a disadvantage to competitors in countries where laxer environmental regulations allow companies to produce and sell goods more cheaply. While European officials argue that their policy complies with global trade rules in a way that US clean energy subsidies do not, it has still ranked countries like China and Turkey.

The Biden administration has also been trying to create an international group that would impose tariffs on steel and aluminum from countries with laxer environmental policies. In December, it sent the European Union a brief initial proposal for such a trade arrangement.

The idea still has a long way to go to be realized. But even as it would break new ground in addressing climate change, the approach may also end up aggravating allies like Canada, Mexico, Brazil and South Korea, which together provided more than half of America’s foreign steel last year.

Under the initial proposal, these countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs on their products.

Proponents of new climate-focused trade measures say discriminating against foreign products, and goods made with greater carbon emissions, is exactly what governments need to build up clean energy industries and address climate change.

“You really do need to rethink some of the fundamentals of the system,” said Ilana Solomon, an independent trade consultant who previously worked with the Sierra Club.

Ms. Solomon and others have proposed a “climate peace clause,” under which governments would commit to refrain from using the World Trade Organization and other trade agreements to challenge one another’s climate policies for 10 years.

“The complete legitimacy of the global trading system has never been more in question,” she said.

In the United States, support appears to be growing among both Republicans and Democrats for more nationalist policies that would encourage domestic production and discourage imports of dirtier goods — but that would also most likely violate World Trade Organization rules.

Most Republicans do not support the idea of ​​a national price on carbon. But they have shown more willingness to raise tariffs on foreign products that are made in environmentally damaging ways, which they see as a way to protect American jobs from foreign competition.

Robert E. Lighthizer, a chief trade negotiator for the Trump administration, said there was “great overlap” between Republicans and Democrats on the idea of ​​using trade tools to discourage imports of polluting products from abroad.

“I’m coming at it to get more Americans employed and with higher wages,” he said. “You shouldn’t be able to get an economic advantage over some guy working in Detroit, trying to support his family, from pollution, by manufacturing overseas.”

Author: Yuvi

My name is Yuvi, I work as Sub Editor at newscinema.in

25 January, 2023, 3:30 pm

News Cinema on twitter News Cinema on facebook

Wednesday, 25th January 2023

Latest Web Stories

More Stories
MDMA and magic mushrooms approved for treatments
Miami mocked for unveiling African-themed police cruiser to celebrate Black History Month
Landlord found by tenant to be posing as handyman and entering home without notice
Bad posts, tough jobs and hostel shenanigans – Times Anubhav Singh Bhasi made us cry, laugh
Senate Judiciary Committee puts Ticketmaster on notice ahead of Beyoncé tour
Tesla electric car outsells Australia’s most popular SUVs
New York Blocks Payments to 20 Firms That Serve Hasidic Schools
The last dramatic episode of FC Barcelona is called Gavi
Three University of Idaho students claim they saw murders union suspect Bryan Kohberger at student
Madonna’s daughter Lourdes Leon DENIED entry to Marc Jacobs show after arriving after doors closed
Pamela Anderson defends unlikely friendship with Julian Assange and defends him as a ‘truth seeker’
How the multi-million dollar crime empire of feared Melbourne kingpin George Marrogi was smashed
ABC cops formal complaint over ‘white supremacy’ report on Alice Springs crime wave crisis meeting
Olivia Wilde looks somber while out in West Hollywood amid child support battle with Jason Sudeikis
Don Lemon ‘SCREAMED’ at CNN This Morning co-host after he accused her of ‘interrupting’ him
Man Paid $20,000 in Bitcoin in Failed Attempt to Have 14-Year-Old Killed, US Says
‘I asked her why…’: Aruna Irani shares Rekha’s ouster from ‘Mangalsutra’
Gauri Khan Faces Oops After Her Jacket Gets Stuck On A Pole Outside Designer Store – WATCH
She Took On Atlanta’s Gangs. Now she may be coming for Trump.
PIC: Boy, 5, who was brutally attacked by a mountain lion before his mom wrestled the animal off him
Siddharth Malhotra and Kiara Advani wedding: From the royal arena, Shahid Kapoor, Karan Johar star guest list dates, scoop
China Spying on America Using Balloon as Big as Three Buses? US Tracking Suspected Chinese Spy, Says Pentagon
Miami landlord is SLAMMED after filming himself telling tenant he’s more than doubling her rent
Qantas savaged after CEO Alan Joyce claims airline is ‘back to its best’
Actress And Hairdresser Took $3 Million From Malibu Doctor, Prosecutors Say
Report Traces Rising Prevalence of Semiautomatic Pistols in Gun Crimes
Unopened original iPhone set to ring up £41,000 at auction
Pentagon Discovers Suspected China Spy Balloon Over Northwest United States
Can a $1 TRILLION platinum coin solve the US debt crisis?
Who Do Bears Rub Against Trees? Scientists Offer New Explanation.
Lip reading analysis reveals Tom Brady raged about ‘sounding stupid’ during furious phone call
Biden Aims to Deter China With Greater US Military Presence in Philippines
Report finds 80 percent of butterflies have declined since the 1970s
Tech’s Biggest Companies Discover Austerity, to the Relief of Investors
MATT RIDLEY: Scientists will one day bring back dodos, great auks and even woolly mammoths
Arkansas Gov. Sarah Huckabee Sanders to deliver GOP State of the Union rebuttal
Furious legal row in Murdaugh trial over whether jury can hear about legal scion’s financial crimes
Soaring Death Toll Gives Grim Insight Into Russian Tactics
Mary Magdalene: Model’s 38J implant bursts, left with ‘alien uniboob’
The 10 US cities where black Americans fare best – and worst – economically
Gwyneth Paltrow opens the door to her priceless fashion ARCHIVE – filled with designer items
The Northeast Braces for the Worst Windchill in Decades