Thursday, August 06, 2009

US Senate Democrats from manufacturing states want tariffs on foreign goods in climate change bill

The Wall Street Journal reports that 10 Democratic Senators have signed a letter to the President saying that there must be tariffs on goods from countries that do not have carbon limits in a climate change bill. While I am not an economist, I understand that this is actually the best technical solution. While it might seem protectionist on its face, I would endorse a tariff system like this provided it was well designed - it would give China and India an incentive to strictly contain their carbon emissions. I am a fan of international engagement, but I'm under no illusions that China and India would otherwise enact a cap and trade mechanism.

That said, the first problem is that this may violate WTO regulations. The second is that the Chinese and Indians will choose to interpret this as protectionism (albeit they will probably be right).

It would be nice if the President used the threat of a tariff to get the Chinese and Indians to put explicit limits on their carbon emissions. I'll leave that bit to the State Department. However, I will say this: there is no excuse for any nation, whether in the West or the Global South, to not contain their carbon emissions. Trading short term economic prosperity for flooding, massive population displacement, massive shifts to weather patterns, disruption of water and the food supply and other similar problems is not a choice that a rational nation can make.

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