Fixing China's Greenhouse Gas Emissions For Them

mdsolar writes: 'Paul Krugman, who won a Nobel Prize for understanding world trade, has proposed carbon tariffs as a way to get China to cut greenhouse gas emissions. He wrote, "China is enormously dependent on access to advanced-country markets — a lot of the coal it burns can be attributed, directly or indirectly, to its export business — and it knows that it would put this access at risk if it refused to play any role in protecting the planet. More specifically, if and when wealthy countries take serious action to limit greenhouse gas emissions, they're very likely to start imposing "carbon tariffs" on goods imported from countries that aren't taking similar action. Such tariffs should be legal under existing trade rules — the World Trade Organization would probably declare that carbon limits are effectively a tax on consumers, which can be levied on imports as well as domestic production. Furthermore, trade rules give special consideration to environmental protection. So China would find itself with strong incentives to start limiting emissions." As I read it, Article XX of the General Agreement on Tariffs and Trade does indeed allow us to unilaterally impose tariffs on China.'

mdsolar continues, "I'd suggest that there should be a ramped approach. First, we should acknowledge that dangerous climate change has come early and we are already suffering damages. The growth in Federal crop and flood insurance payouts is owing to the effects of climate change. Instead of increasing premiums, we should use climate damage tariffs to cover this increase. That amounts to a pretty small tariff, but it firmly establishes the liability connection. Non-Annex I countries (as listed in the Kyoto Protocol) are becoming the main contributors to cumulative emissions just as climate change has turned dangerous, that makes their emissions the cause of dangerous climate change. An accident of timing? Yes. But deliberately increasing emissions, as China is doing, eliminates safe harbor as well.

This small tariff could be used as a stepping stone to larger tariffs imposed cooperatively with other Annex I countries if China does not turn around. The larger tariffs could be used to assist with adaptation costs in countries with low per capita emissions where vulnerability to dangerous climate change is high. Lack of a clear funding mechanism for this sort of thing has been a sticking point at climate negotiations. This would essentially get funds from those who are causing the damage."

How to use Article XX

[mdsolar]

I'd suggest that there should be a ramped approach. First, we should acknowledge that dangerous climate change has come early and we are already suffering damages. The growth in Federal crop and flood insurance payouts is owing to the effects of climate change. Instead of increasing premiums, we should use climate damage tariffs to cover this increase. That amounts to a pretty small tariff, but it firmly establishes the liability connection. Non-Annex I countries (as listed in the Kyoto Protocol) are becoming the main contributors to cumulative emissions [ipcc-wg3.de] just as climate change has turned dangerous, that makes their emissions the cause of dangerous climate change. An accident of timing? Yes. But deliberately increasing emissions, as China is doing, eliminates safe harbor as well.

This small tariff could be used as a stepping stone to larger tariffs imposed cooperatively with other Annex I countries if China does not turn around. The larger tariffs could be used to assist with adaptation costs in countries with low per capita emissions where vulnerability to dangerous climate change is high. Lack of a clear funding mechanism for this sort of thing has been a sticking point at climate negotiations. This would essentially get funds from those who are causing the damage."

Your reading of GATT is not applicable.

[tlambert]

Your reading of GATT is not applicable. China falls under MFN, and tarrifs based on carbon emissions generally fall under "special interest protectionist measures", which means that they are not applicable.

In reality, implementing this would either require revocation of MFN status for China by the U.S., or modification to GATT. Modification to GATT would require a unanimous vote in the WTO, of which China has been a member since 11 Dec 2001, which means that a modification to GATT is off the table.

I've suggested that the way to deal with this, and with most of the job threat from offshoring, in fact, was to hold countries supplying products to the same standards that a domestic producer of those products would be held. That would include environmental, labor, and similar standards. This wouldn't address the economic inequity of people being to live for a lot less in China as on the same wages of the U.S., or that products manufactured for markets other than the U.S. market would necessarily meet U.S. standards either. But it would be a step in that direction.

To deal with any of the other loopholes, such as the "final assembly" loophole, where tarrifs aren't charged if the final assembly occurred within a given economic block, rather than in a foreign economic block (also called the "last major transformation" clause), would require even more work. So companies like Apple could still perform final assembly of Apple products in the Czech Republic, which, as an EU member, means not paying VAT import taxes compared to if they were wholly manufactured in China. Just as companies like GM do in the U.S. with regard to primary engine components for automobiles manufactured in Brazil.

Practically speaking, there's no way to get rid of all the loopholes without a One World Government(tm), which most people are against (especially the existing governments of nations which would be superseded by such a thing).

We may be driven there eventually, but we know the real solution to the carbon problem is to move to other sources capable of handling ever increasing base loads - and yeah, that doesn't mean hydroelectric, which endangers fish populations, or unreliable wind, or solar based on the available of solar grade silicon, relative to demand, being rather low.

Wishful? Trade is a two-way street, is it not?

[raymorris]

"China is enormously dependent on access to advanced-country markets". If Americans, for example, didn't have access to BUY goods from China, a lot of our inexpensive consumer goods would cost quite a bit more. Cables for electronics, lightbulbs, trash cans, trailer hitches, and a million other things would cost alot more to produce domestically. Therefore, cutting ourselves off from China would mean we could afford to buy less - we'd all become poorer, in terms of purchasing power. In that way, we're nearly as dependant on China as they are on us, are we not?

Krugan certainly knows more about global economics than I do, but he's not shy about the fact that his writings are as much about promoting a liberal agenda as they are about understanding how global markets actually work. His book and blog are both titled The Conscience of a Liberal. Perhaps this proposal is a bit of wishful thinking, of wanting to promote "green", setting aside the fact that we don't really have much leverage over China. Heck, we've been trying for decades to get them to have some respect for basic human rights and we haven't been able to coerce them to do anything on human rights that they didn't want to do. They've been quite bold with claiming territory and sending warships to places they ought not be, so they don't seem to think the western countries have any leverage to rebuke them.

Re:The facts?

[retroworks]

Mod parent up. This is a silly idea. Yes, the Non-OECD growth in carbon emmissions is growing enormously. But the non-OECD still has LESS CO per unit of production than the OECD. In other words, a carbon tax would benefit China production from the start. Plus, over time, China's already investing a lot more in CO free energy (as a percentage of GDP) than the OECD is. http://www.eia.gov/forecasts/i... [eia.gov]. Trade agreements don't allow WTO members to apply rules specifically against a certain member, they apply to all members, and the West still produces more CO per capita

Obesity too is increasing in China. But if you tax obesity, you aren't going to advantage western countries. .