Key Senators, Krugman Call for Tariffs on High-Carbon-Footprint Imports

Speaking Tuesday on a Campaign for America's Future conference call, Ohio Sen. Sherrod Brown said that the climate change legislation will not get 50 Senate votes if it does not place a tariff on imports that have unacceptably high carbon footprints.

For example, Chinese steel mills produce three times as much carbon emissions as American steel mills As a large body of research has pointed out, most of these savings come from weaker environmental standards and not labor costs, since labor accounts for less than 10 percent of the price savings.

U.S. steel companies spend around twice as much per ton of steel to control pollution than does the Chinese steel industry. Chinese industry is expending only about 3 percent of its capital expenditure budget on pollution control equipment, far less than the 17 percent the U.S. industry averaged for the last few years as it was improving its environmental controls. China and many other countries are able to make cheaper products because they cut corners on environmental costs.

The U.S. steel industry is the most sophisticated and efficient of steel producers, so advanced that when a group of bloggers toured a steel mill during Netroots Nation, we weren't allowed to take pictures out of fear that competitors could steal trade secrets from the photos. However, the American industry can't compete with nations like China and India who are allowed to cut costs dramatically by poisoning the air and the water at levels that are threatening to us all.

To enact strict emissions regulations domestically and not force other countries to do the same would be a tragedy for the American economy as industry would flee for these countries. For this reason, a group of 10 Democratic senators -- including Brown, Robert Byrd of West Virginia, Russ Feingold of Wisconsin, Evan Bayh of Indiana and Al Franken of Minnesota -- sent a letter to President Obama that said they would not vote for any legislation that does not include tariffs on products with unacceptably high carbon footprints. As the Senators argued in their letter:

We must not engage in a self-defeating effort that displaces greenhouse gas emissions rather then reducing them and displaces U.S. jobs rather than bolstering them.

Indeed, if the U.S. adopts agreed-upon climate terms and other countries do not live up to their end of the bargain, we will see companies close factories in the U.S. and ship them to countries that allow unlimited harmful pollution.

As we have seen in the instance of the Chinese tire import issues, countries have again and again allowed big multinationals to violate their treaty obligations in the name of profits. By putting tariffs on products with unacceptably high carbon footprints, we can effectively combat global warming as many environmental organizations have advocated .

Even Paul Krugman, a typical defender of free trade, called for similar tariffs in a must-read piece entitled "the Empire of Carbon." Krugman dismisses those that cry that a tax on carbon dioxide is protectionism by saying:

As the United States and other advanced countries finally move to confront climate change, they will also be morally empowered to confront those nations that refuse to act. Sooner than most people think, countries that refuse to limit their greenhouse gas emissions will face sanctions, probably in the form of taxes on their exports. They will complain bitterly that this is protectionism, but so what? Globalization doesn't do much good if the globe itself becomes unlivable.

Furthermore, globalization doesn't do much good if the global economy becomes unsustainable. Manufacturing is the backbone of any economy. If you don't make something, you are forced to borrow until you can't borrow anymore. With credit markets frozen, the American economy has reached that point we can no longer borrow and are unable to buy the world's products on credit.

We have seen that unemployment and poverty have risen around the world as a direct result of the global economic imbalance. Leaders of the labor union federations from the 20 countries have called on their leaders to make the economy more sustainable in their "Pittsburgh Declaration." According to their report, unemployment is slated to double over the next 18 months in the industrial countries, and continue to rise with rates over 10 percent well into 2011. Additionally, over 200 million workers worldwide will be pushed back into extreme poverty.

Creating a system of global trade that is sustainable and allows all countries including the United States to flourish is necessary for a global economic recovery. To do this, we must enact strong laws that don't allow one country to cheat the other by polluting their way to low prices.

Some argue that such measures, such as putting a tariff on products with a high carbon footprint are protectionists and harmful. However, as Steelworkers President Leo Gerard argues today in a must-read New York Times piece defending the decision of his union to call for enforcement of trade laws on tire and paper imports:

"Anybody who believes we have a rule-based system, but we shouldn't enforce the laws, they're the ones jeopardizing the global trading system."

Without a commitment to live up to -- and a precedent of enforcing -- agreements, any climate change treaty signed at Copenhagen or at future summits won't be worth the paper it is printed on.

In the wake of the China tire-import decision, we have heard a lot of rhetoric falsely labeling it as the beginning of a trade war. It is not. What is really happening is that workers around the world are engaged in an effort to protect themselves from the harmful effects of pollution and an unsustainable economy that hurts us all.

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Comments

[red1961]

I can't believe it. I actually agree with Sherrod Brown on something. "Free Trade" is not "free" at all. It dehumanizes foriegn workers who toil in dangerous and unsafe conditions -- unregulated by their backward or corrupt regimes -- and sends American manufacturing jobs away. I have never understood why we should have "free trade" with countries that exploit workers mercilessly. Brown sees this as a "carbon footprint" issue. Fine. China is one of the most polluted countries in the world -- with air quality so bad that they had to have factories near Peking shut down before the Olympic games. Should "high carbon footprint" products pay a tariff?
Normally i would say no to tariffs -- but not this time.
Chinese manufacturers are exploiting Chinese laborers and American consumers with unsafe and shoddy products and have been doing so for years. Our corporations import this junk to make a buck off the American consumer while throwing millions of Americans out of our regulated and realatively safe manufacturing sector. Yes, put a tariff on these products. If you have to call it a "carbon footprint" tariff, go ahead -- but it really should be an "Unregulated/unsafe industry/exploited worker" tariff. By the way, why not a tariff on non-unionized manufacturing or manufactuiring jobs that have no healthcare, pension, etc. etc. =--- because that is what American workers have been competitng with for years -- and the same countries that have these working conditions produce unsafe products...

[KenJohnson]

There is a simple alternative to tariffs: Impose a uniform carbon fee (per ton of CO2) to all steel products consumed in this country, including imports. Apply the revenue as a steel production subsidy (per ton of steel), again without differentiating imports from domestic production. Steel producers who have better-than-average emission intensity will derive a net profit, while those that are worse than average will incur a net loss.

I think this kind of system would be much more practical and politically palatable, and much more effective at decarbonizing steel production, than any kind of "economy-wide" regulatory system. If we want to also reduce CO2 by minimizing steel use, a similar fee/subsidy system could be applied to end-use products that use steel or alternatives to steel. (Since the policy is revenue-neutral within the steel industry, end-use consumers would not be double-paying for products' CO2 content.)

[sspitsbergen]

One, global warming is science, not a scam. Stop that.

This makes perfect sense, in the US we have passed laws that require companies to minimize their impact on the environment, we have the legal basis to expect other companies who want to sell their product here to conform to these same rules. With the concept of the carbon footprint becoming a commonly used concept, it is now feasible to determine each companies impact and assign tariffs accordingly.

I had thought of this (although I might have gleaned it from other sources - I won't claim complete originality since I didn't publish my thoughts anywhere), but I think it could expand to other areas, such as labor laws - if a company is forcing children to work, we can fine them in the form of tariffs to the extent we could fine a company in the US.

However, we must apply this fairly to all products and with the same enforcement as if the company were in the US, i.e. this cannot be a punitive measure, that is the job of the State Department embargoes.

[RomeoMD25]

The global warming scam passed by Congress. Goldman Sachs is in the middle of it, as usual– a potential trillion dollar sure thing.

And Former Vice President Al Gore who will profit from the cap-and-trade plan through his company, Generation Investment Management,–
Gore is joined by three former Goldman Sachs heads in their carbon offsets business.

[SamEllison]

Chinese steel and
Canadian tar sands oil.

[fatnugly]

These arguments along with fair trade arguments are just new ways to argue against free trade.

[TryToBeFlexible]

Free trade is stupid. It just sends our jobs and our wealth to other nations, and impoverishes us.

[Mike Elk - Huffpost Blogger]

free trade isnt always bad just if there are no rules. in theory its good when u have a level playing field, we just arent there yet.