Chu and Gao Should Stop Climate Change Trade War Talk

Department of Energy Secretary Steven Chu, speaking at a House Science Committee hearing 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 postulated the establishment of a carbon tariff to help "level the playing field" if other countries haven't imposed greenhouse-gas-reduction mandates. Chu believes that if other countries don't impose a cost on carbon, then America will be at a disadvantage. He wants to examine the imposition of duties that would offset that cost. This is not a good idea. But it was probably a political response to China's contention that countries buying Chinese goods should be held responsible for the heat-trapping gases released during manufacturing in China.

Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, believes a carbon tariff would be a disaster, prompt a trade war and not be legal under World Trade Organization agreements. China wants importers of its carbon-intensive goods to bear the emission costs, concerned that targets such as those proposed by the U.S. would cripple the nation's growth as an industrializing nation. The U.S. does agree with China that an international agreement should be based on a principle that allows a less-stringent and longer-term flexibility for developed countries. Obama administration officials also agree that developed countries need to help to finance the technology transfer for low carbon energy and efficiency measures. (WSJ, 3/17/09)