The US has finally managed to pass a bill through the house of representatives dealing with climate change (sort of). It is laden with pork-barrel initiatives because the congress members realised that they could treat carbon credits as a type of free-money boondoggle. It still has to pass the senate and get approval from Obama, and neither is likely to be a shoo-in. But it will probably pass. It has some significant implications in the future for New Zealand’s trade if we are not doing our part on climate change.
As the Economist says
The House’s climate bill is a masterpiece of obfuscation. Buried somewhere in the 1,200 pages of the American Clean Energy and Security Act (also known as Waxman-Markey, after its sponsors) is a sensible cap-and-trade plan to curb emissions of carbon dioxide (CO2). But it is so weighed down with giveaways, loopholes and needless complexity that many environmentalists hesitate to support it.
This much the same kind of stuff that every special interest group like farmers has been submitting into the ‘review’ of the emissions trading scheme here that ACT forced as part of its coalition agreement.
However what is of note for New Zealand is this..
It gets worse. A new provision, added just before the vote, would oblige the president to impose tariffs on goods from countries that do not limit greenhouse-gas emissions. This is probably illegal under WTO rules and could start a trade war with China and India. Even Mr Obama choked on it. ‘I think we have to be very careful about sending any protectionist signals out there,’ he said. But would he veto?
Obama is unlikely to veto the bill. It will probably be toned down a bit by the senate. But in any case, this has been signalled by the US administration previously that they want action (and aren’t happy with free-loaders on climate change). At the Bonn conference earlier this year the US envoy said :-
You will not get one member of my delegation questioning the science of climate change, nor the urgency. The science is clear, the threat is real, and the facts on the ground are outstripping the worst-case scenarios. The costs of inaction or inadequate action are unacceptable.
I suspect that Obama will take what he can get. The tariff provision doesn’t kick in until 2020. When it gets tested in the WTO there is the defense that along with the goods, high-carbon exporters are also modifying the worlds atmosphere and exporting that as well.
What it will do is to make it easier for the legislators in other countries add the same provision to their climate change bills. This makes it important for our ETS act, when it gets out of Rodney Hide’s ‘review’ to be actually doing something. Otherwise we’ll find barriers going up to our trade. Not something that can be favoured in a exporting nation.