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."

Comments

Re:Who is being taxed, exactly?

[mdsolar]

Correct. But industry in the US would pick up, leading to more domestic prosperity. Without the tariff, China gets to lower costs of production and compete unfairly, reducing US GDP. Note also that we are paying this in increased flood and crop insurance premiums. The latter directly cuts into the competitiveness of our agricultural exports. Better to pay with external tariffs than internal premiums.

Re:Who is being taxed, exactly?

[Misagon]

You could also see it this way:
You would be taxing away the competitive advantage that companies in a polluting country would have against companies in those who restricts its carbon emissions.

In the short term, it would promote domestic business. In the long term, the polluting country is supposed to lower its emissions and get back in the game, and then both foreign and domestic companies should be able to compete on the same terms - creating more competition and again lower prices.

Bollocks

[The Evil Atheist]

Why should China, or any developing country, give up its own economic development when the currently developed and powerful countries didn't have to and because they lack the political will do their part? Developed countries should see this as an opportunity to make money from China by selling them back cleaner technology that the developed countries invent.

It's bollocks to say "well, we already have a developed economy and we're too scared to change anything, so we'll make you live by the sink or float rules that we impose on you because we can".

Re:Yes, good idea.

[AmiMoJo]

The EU has been doing this for a long time. RoHS stopped them putting hazardous substances in products just to keep costs down. We already have a scheme for carbon trading that takes into account companies that do their manufacturing in China, although it could go a lot further.

Nice to see the US finally waking up to this.

Re:Yes, good idea.

[angel'o'sphere]

The USA only want to put an carbon tax/tariff on foreign products.
They will look pretty dumb when the 'foreigners' put the same tariffs on US products.
AFAIK the USA are just a very small bit behind China in CO2 output. That means per inhabitant and also per 'product produced' the USA produce far far far more CO2 than China.
When we have world wide CO2 based tariffs, the USA will be the first country going 'bankrupt'.