'Green tariff' is a step back to protectionism
When US lawmakers recently approved legislation to limit America's emissions of carbon dioxide and other greenhouse gases, it was widely hailed as an important new step in confronting climate change. Under the George W. Bush presidency, the US refused to join other industrialised nations in capping emissions, arguing that it would add unfair costs to business and blunt the competitive edge of the world's biggest economy.
But the applause for the Obama administration and the majority Democratic Party in pushing for a cap-and-trade law in Congress has since diminished as critics scrutinise the details. One provision that has caused concern was inserted shortly before the House of Representatives passed the bill last month.
It requires the president, from 2020, to impose special import taxes on goods from countries that have not enacted and enforced similar cap-and-trade controls on their global warming emissions.
With economies around the world still weak, the prospect of protectionism spreading in many different forms alarms trade-dependent Asian nations. China has condemned the US for resorting to 'trade protectionism in the disguise of environmental protection'.
When heads of government of the Group of 20 leading developed and developing economies met in Washington last November, they pledged not to introduce any new protectionist measures for at least 12 months and restart stalled negotiations to liberalise world trade. They have failed dismally on both counts.
Since then, the World Bank and the World Trade Organisation have recorded dozens of breaches by G20 countries. Are we heading for another form of protectionism, one with 'green' tariffs?
US President Barack Obama has indicated concern about the 'green' tariff proposal, but has not said whether he would veto it.
Supporters say a tariff is needed to shield US industries that use or produce lots of energy, and whose goods are traded globally. Otherwise such industries, which include steel, aluminium, cement, chemicals, coal, oil and natural gas, could be placed at a disadvantage compared with countries without strict regulations to control emissions.
To ensure that energy-intensive industries did not shift production to regions with less-stringent rules to protect the environment, the European Commission proposed that importers pay the same emission charges for non-European goods as domestic producers, in effect imposing hefty green tariffs on 'dirty' imports.
In the negotiations leading to the climate summit in Copenhagen in December, developing countries are being asked to draw up national action plans setting out how they will try to curb emissions and promote clean energy.
Probably the toughest challenge facing negotiators is to craft a compromise deal to synchronise the obligations of both developed and developing nations in a way that is seen to be fair and effective.
Michael Richardson is a visiting senior research fellow at the Institute of Southeast Asian Studies in Singapore
