Carbon Protectionism: ‘The Mother of All Trade Issues’

By Robert Bradley Jr. -- March 9, 2020

“It’s pointless to reduce carbon emissions inside Europe, to then import them from outside.” (Bruno Le Maire, Minister of the Economy and Finance, France)

“When I was our ambassador to the EU, I spent a lot of time on some very difficult trade issues. This could become the mother of all trade issues if not handled right.” (Richard Morningstar, Atlantic Council’s Global Energy Center)

– Quoted in “How Europe’s Border Carbon Tax Plan Could Force the U.S. to Act on Climate Change,” Time, March 4, 2020.

Tariffs and quotas in the name of CO2 reduction, euphemistically called “border adjustments,” is the wolf at the international door. From the U.S. side, Joe Biden and other Democratic candidates have threatened such protectionism if elected. Part III of Biden’s Climate Plan states:

As the U.S. takes steps to make domestic polluters bear the full cost of their carbon pollution, the Biden Administration will impose carbon adjustment fees or quotas on carbon-intensive goods from countries that are failing to meet their climate and environmental obligations.

Justin Worland’s “How Europe’s Border Carbon Tax Plan Could Force the U.S. To Act on Climate Change” (Time, March 4, 2020) has documented the latest hot-button intervention in the Climate Crusade. At WUWT, Eric Worrall noted

Brexit has left the EU desperately short of cash, but I doubt President Trump will let the EU fill their budget shortfall by slamming US businesses with a new carbon tax.

And

the EU has no backbone when it comes to trade disputes. When President Obama rejected the EU’s last attempt to impose carbon taxes on US businesses, the EU’s response was to express their disappointment.

But desperate organizations do desperate things, and the EU threat is one that should wake up conservatives and libertarians, if not pro-trade Democrats. (Bets are off with the US Green Party, as well as climate alarmists-qua-Progressives.)

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Worland’s essay deserves extensive reproduction (subtitles added). It is an example of the march of intervention as one government measure calls for another and yet another. And get ready for fake conservatives and classical liberals to use the ‘inevitability’ and ‘surrender’ argument instead of using the risk of a global trade war to reject carbon taxation/pricing.

“On Wednesday, European Commission President Ursula von der Leyen presented the European Climate Law, which would bind the bloc to eliminate its climate footprint by 2050 and officially launched the policymaking process to enact a new tax on products from countries that aren’t working to reduce their emissions. Such a rule could leave U.S. companies at a serious—and costly—disadvantage as they compete for business in the EU.”

Blame the Republicans–and Trump

“The list of reasons to act urgently to stem greenhouse gas emissions and address climate change is long and established, but Republicans in Washington have remained largely unmoved. This week, the European Union’s executive branch unveiled a new law that could change that.”

“The EU’s plan is a significant escalation, but it’s not a complete surprise. The intellectual foundations behind policy, which the EU has dubbed a border carbon tax, have been discussed in policy circles for years. As the EU has doubled down on policies to reduce emissions, and the U.S. and others have lagged, pressure mounted on the bloc to take more sweeping action.”

“Trump’s destruction of trade norms also helped pave the way toward the EU’s embrace of a border carbon tax. For decades, western countries have been careful to avoid trade barriers that might damage the delicate global trade regime, but Trump’s widespread use of tariffs on allies and competitors alike changed the dynamic.”

Fake ‘Republican’ Groups on Board

“Several groups in Washington are pushing for the U.S. to get ahead of the Europeans’ plan by implementing its own carbon tax, along with an adjustment at borders. Such a move would make U.S. businesses more competitive on the global stage as countries increasingly demand more energy-efficient products, advocates say.”

“Supporters of such an approach include a conservative group, the Climate Leadership Council (CLC), which is backed by some of America’s biggest companies, green groups, economists and Republican elder statesmen. ‘This really creates an incentive for other countries to say, “yeah, I want to get inside that club,”’ says former Federal Reserve Chair Janet Yellen, who supports the CLC.”

Play Nice With Trump

“… the European Commission has sought to strike a conciliatory tone even as they prepare a policy that could be detrimental to many of its trading partners. ‘I would expect a very significant engagement on this side of the Atlantic,’ said Ditte Juul Jørgensen, director-general for energy at the European Commission, during a February trip to Washington where she met with officials in the Trump Administration and spoke to various energy leaders outside government.”

Club in the Closet?

“The notion of implementing a carbon tax in the U.S. has a long list of supporters, but still actually enacting it remains an uphill battle. Still, U.S. businesses will soon start feeling the effects of the EU’s border carbon tax, and that might be just the motivation that the foot-dragging U.S. needs to finally get in gear.”

The CO2 crusade being urged upon us is a one-way ticket on the road to serfdom. There is no intervention too broad or too severe to the Malthusian Left, those who feel victimized by modern living and by the self-interested action of others.

There can be no effective carbon tax without corresponding carbon tariffs and quotas at that country’s border. And there is no effective tax or tariff given political realities and government failure.

The name of the game is anticipatory entrepreneurship to realistic weather/climate scenarios, not government control of industrial and personal life.