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Posts Tagged ‘green’

Green tariffs make no sense

International climate talks in Bonn last weekend were trying to salvage December’s failed Copenhagen summit.

But some rich countries are imposing their own carbon limits anyway, and threatening to curb imports from poor countries that are not. We believe this will cripple the rich economies and harm the poor countries without doing much about emissions.

A number of governments want such green protection, including taxes on carbon-intensive imports, or all imports, from countries that do not cut emissions, especially the main targets, China and India.

US climate legislation before the Senate calls these policies “a border measure”.

But these ideas threaten international trade, growth and recovery. Industries in rich countries face punitive and expensive measures against climate change. Many fear they will be unable to compete with countries that do not have such emissions restrictions, and fear manufacturing and jobs will move away to them.

The EU wants to cut emissions by 20 per cent by 2020, while proposed US legislation aims for 80 per cent by 2050. Other large emitters of greenhouse gases, such as India and China, are more worried about sustaining growth and tackling poverty.

Carbon restrictions on trade will do little to reduce emissions. Taxing carbon-intensive imports from China, for example, would have negligible impact because the majority of its emissions-laden exports go to other developing countries.

Carbon barriers to trade make even less sense considering the nature of global production. “The extensive foot-printing of so many products with components across so many international boundaries makes this exercise nigh on impossible,” Australia’s Department of Climate Change stated in 2008.

Rich countries import about a third of their CO2 emissions (meaning the amount of CO2 released in making the imported goods), often from developing countries. The production of a single good often involves trading components between many countries. Complex supply chains have brought cheaper and better goods and high-paying jobs to rich countries, and infrastructure, new jobs and higher incomes to developing countries.

More than a quarter of all global trade in manufacturing is in intermediate components, not finished goods. The value of component trade rose from $US404 billion in 2002 to $US1258bn in 2004. Rich countries cannot restrict imports without damaging their own production and growth. They would just protect their inefficient companies that are vulnerable to competition at the expense of globally competitive companies.

A few months ago, the EU extended tariffs on shoe imports from East Asia at the request of its domestic shoe producers. Yet such tariffs harm EU shoe companies that have invested heavily in manufacturing in Asia: they provide EU consumers with cheap shoes and support high-value jobs in Europe in marketing, innovation and design.

Barriers to trade for the sake of climate control would have the same effect, and would push up prices everywhere.

US President Barack Obama warned during the global recession last year: “We have to be very careful about sending any protectionist signals out there.” Yet the US joined Australia, the EU and Japan in rejecting demands at Copenhagen by India, China and other developing countries that rich nations “not resort to any form of unilateral measures against goods and services imported from developing countries on grounds of protection and stabilisation of climate”.

Caroline Boin and Alec van Gelder are project directors at the International Policy Network, a development think tank based in London

Petition Against Green Protectionism

You have no doubt heard about the UN’s climate conference in Copenhagen next month. Chief among the bad ideas being touted by environmental activists and politicians in the run-up to that meeting is a proposal to permit trade restrictions on the grounds that they will help to prevent climate change (for example by encouraging governments to sign up and comply with an international agreement to restrict emissions). Pascal Lamy, director of the World Trade Organization, has even sanctioned this approach, saying that the world’s priorities should be “climate first and trade, second.” And – surprise surprise – uncompetitive industries and other vested interests have jumped on the bandwagon.

Trade – along with the increased wealth and the better, less costly products and production processes that it yields – offers people in poor countries the possibility once and for all to address chronic problems such as drought-induced famine and poverty-induced diseases. Without trade, people will be much less able to adapt themselves to the climate they face now and in the future. Meanwhile, imposing restrictions on trade will inhibit specialisation and innovation, which may slow down the development of low-carbon technologies. In other words, trade restrictions are neither desirable nor are they an effective way to prevent climate change.

This petition against green protectionism is sponsored by IPN and the Freedom to Trade Campaign. If you agree, then use our online signup form to add your name (and then to confirm, click on email link that is sent to you.)

We call upon the World’s leaders to resist calls for green protectionism. Trade enables specialisation, which results in the development of new technologies and leads to the creation of wealth. In the past two decades, trade has enabled over a billion people to escape poverty. Trade is the most powerful weapon in humanity’s armoury to fight poverty and environmental ills, including climate change. Trade restrictions are not desirable, nor are they an effective means of addressing climate change.

SIGN THE PETITION: online sign-up form