Bill adds carbon tariff on foreign goods
A climate change bill making its way through Congress would place a tariff on some foreign-made goods. Host Kai Ryssdal talks to Marketplace's Sam Eaton about the controversial provision.
Smoke pours from the smokestacks of an industrial plant. (Maxim Marmur/AFP/Getty Images)
More on Sustainability, Copenhagen
TEXT OF INTERVIEW
Kai Ryssdal: Barack Obama rode last night's big news back into Washington today. The presumptive Democratic presidential nominee swung by his place of employment to vote for a draft federal budget -- $3 trillion worth of spending recommendations that he is really hoping he'll have to deal with come January.
Elsewhere on the legislative calendar, the Senate's debating climate change this week -- the Lieberman-Warner Climate Security Act it's called. It's a bill that would drastically reduce the nation's carbon footprint by putting a cap on greenhouse gas emissions and then letting big polluters buy and sell the rights to pollute more if they needed to.
Cap and trade's a market-based approach, but the U.S. market would stop at the border thanks to a provision buried deep in that bill's fine print.
Sam Eaton's covering the story for us.
Hey Sam.
Sam Eaton: Hi Kai.
Ryssdal: Now it's your job to read these things at the Sustainability Desk for us, so what is this provision all about?
Eaton: Kai, it's essentially a carbon tariff.
Ryssdal: Alright, wait; a carbon huh?
Eaton: A carbon tariff, Kai. It's a less complicated way of saying international reserve allowances, but simply put, we're talking about a border tax on goods from countries that don't have a cap on CO2 emissions.
Ryssdal: Alright, so put this into context for me. What does it mean?
Eaton: Well, the idea here, Kai, is that business is global. A cap on greenhouse gas emissions here in the U.S. adds cost to things like U.S. manufacturing, so how do you keep those manufacturers from basically picking up their roots and going to places like China which don't have a cap on their CO2 emissions?
Ryssdal: So, in practice, how would this apply?
Eaton: Well, the aim here is to level the playing field so that these countries like China, say, India, Brazil, don't have what's called an unfair advantage, trade advantage. An example would be, say, a TV set made in China, Kai. Say a ton of CO2 emissions were created during the manufacturing process for that. If you sell that TV in the U.S., Kai, and carbon is trading at, say, $35 a ton, you'd basically impose a $35 fee on every TV set sold from China in the U.S.
Ryssdal: I'm imagining that since it's buried so deep in this 1,000 or 2,000 page climate change bill that it's a fairly controversial provision.
Eaton: It's very controversial, Kai. First of all, it's not even clear whether it's legal. World Trade Organization rules typically frown on any trade barriers of any kind. Free trade advocates call it protectionism masquerading as environmentalism. The U.S. Trade Representative Susan Schwab went so far as to call it "a blunt and imprecise instrument of fear." Now the worry here, Kai, is that politics will trump commerce and these rules will be used to protect inefficient U.S. manufacturers, not solve the climate crisis.
Ryssdal: What we have then, just to make sure I understand this, is the Senate of the Untied States turning this bipartisan climate change bill into a piece of trade legislation?
Eaton: Exactly, and if that happens, the argument goes, less trade with these developing countries could lead to less money that would go to things like cleaner technologies which could then clean up their emissions and, you know, resolve what is essentially an international problem and not just a domestic one.
Ryssdal: Alright Sam, thanks a lot.
Eaton: Thanks Kai.
Comments
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From Durham, NC, 06/07/2008
When I first heard about this bill, my first thought was that I hoped the legislature had the foresight to include some measure to prevent the bill from creating an incentive for American manufacturers to move abroad. In listening to the podcast of your show today I learned about the "tariff" which assuaged my concerns. Then your guest, Sam Eaton, proceeded to the tariff as a ill-conceived. I am not sure if I follow the logic. Capping carbon is a good, responsible step to take. Why should it be done in a way that punishes and disadvantages those manufacturers that choose to remain in the US and employ Americans? Without a tarrif for countries that don't have similar restrictions, it would on create another policy that benefits countries like China to the detriment of the American worker. I have nothing against foreign workers in emerging economies, but we need to stop creating policies that do so to the detriment of our middle-class at home.
From McKinney, TX, 06/06/2008
Climate change is a global problem, you can't outsource polluting activities to another country and solve the problem unless you could outsource it to a country on Mars. Sure it will cost us more to buy a toaster oven, but does anyone ever consider the cost of losing food as our major export, and turning it into a major import?
The conservatives will be raising a big stink over ruining their way of outsourcing polluting to avoid environmental laws, but the environment is a right to life issue and those who claim to side with the Lord should not be complaining that not toasting the planet will make it cost more to sell us TV's.
From Peoria, IL, 06/04/2008
Whenever I've heard about a tax or cap on carbon, I've wondered how do you keep all the manufacturers in the world from moving to a banana republic (carbon republic?) that refuses to do similar caps or taxes. I realize this can be abused, but what are the alternatives to a carbon tariff to keep this from happening? (Implementation details - Will the carbon from international transport get taxed as well, or just manufacturing? Can efficient manufacturers lower their tariff by documenting their emissions?)
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