Global Development: Views from the Center
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September 29, 2006
Stiglitz Urges Tariffs on U.S. Exports to Cut Global Warming
Posted by Lawrence MacDonald at 05:05 PM
Nobel laureate Joseph Stiglitz urged at a CGD event that U.S. trade partners ask the WTO for authority to impose countervailing duties on exports of U.S. steel and other energy-intensive products that benefit unfairly from Washington’s refusal to join the Kyoto Protocol limiting carbon and other greenhouse gasses.
There is a precedent for such duties, Stiglitz said, because Washington previously obtained a World Trade Organization ruling in support of a U.S. ban on the import of shrimp caught in Thailand using nets that killed endangered species of turtles.
"I asked one of the (WTO) appellate judges (involved in the decision) whether he understood what the implications were for global warming, because clearly if you can impose a trade sanction to save a turtle, you can impose a trade sanction to save the planet," Stiglitz told a standing-room only audience. “And the judge said, yes… we were aware of where this was going.” (video and transcripts online )
Moreover, countervailing duties on energy-intensive products would be justified, he said, because the U.S. refusal to restrict the emissions of carbon and other greenhouse gasses unfairly lowers U.S. manufacturing costs, and is thus a form of subsidy.
"One of the main purposes of the WTO is to create a level playing field; subsidies distort the playing field, which is why countries are allowed to offset subsidies through countervailing duties," Stiglitz explains in Making Globalization Work (Amazon) , the new book he was promoting at the CGD event. "This should be the case for hidden subsidies—not forcing firms to pay for the environmental damage they inflict—as well as for open subsidies."
The book contains a detailed explanation of the proposal--and an interesting discussion of the response his idea has received so far from senior officials:
I have discussed this idea with senior officials in many of the advanced industrial countries that are committed to doing something about global warming. And while, almost to a person, they agree with the analysis, almost to a person they also show a certain timidity: the proposal is viewed by some as the equivalent, in the trade arena, of declaring nuclear war. It is not. It would, of course, have large effects on the United States, but global warming will have even larger effects on the entire globe. It is just asking each country to pay for the full social costs of its production activities. Following standard practice, the pressure of trade sanctions could gradually be increased; and almost surely, as America recognizes the consequences, its policies would be altered--as they have been in other instances where the United States has been found in violation of WTO rules.
Making Globalization Work is full of provocative ideas. This strikes me as the most interesting and important--an idea that has the potential to help save the planet.
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Joe Stiglitz wants the World Trade Organization to label the United States' non-participation in the Kyoto Protocol a "hidden subsidy" and allow countries to impose a countervailing duty on US energy-intensive exports. I fear that once the litigation g... [Read More]
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Comments
First off: trade tariffs are an extremely blunt instrument to deal with global climate change.
Second: if Stiglitz is so concerned about the issue, does he propose to levy the same tariff on other non-Kyoto countries like... oh say... China?
Third: the current American administration has spent 2 years fighting for ridiculous steel tariffs and longer than that fighting Canada on softwood lumber. On both cases the United States was clearly wrong, but continued fighting and managed to dislocate international trade. This indicates to me that a limited trade war would be a distinct possibility.
Finally: although Bush has not been great on free trade, there are a number of non-Clinton Democrats that are perfectly ready to throw the issue out the window. Do we really want to give them (and the truly radical anti-globalization people) more fuel for the fire?
Posted by: Dan K at September 29, 2006 10:36 PM
Governments chasing governments is far less preferable than initiatives led by the private sector or government encouraging private sector behavior deemed to be in the public interest.
Two examples. First, whatever the skeptics might suggest, Richard Branson's announcement that Virgin would contribute to efforts to lessen global warming with profits from his pollution-contributing airlines is laudable. May others follow.
Second, government tax credits for the purchase of hybrid cars would be preferable as would credits for installation of solar power generators and similar energy-saving devices.
Posted by: Ken Roberts at October 2, 2006 10:29 PM
Do not fully agree with the 2 below timid comments.
We know that global warming requires Government based solutions to be efficient. It is just not sexy for potential US President to claim new taxes on the so sacred energy consumption. It is not honest vis-à-vis future generations.
Regarding China & India, it is true that they should follow the initiative but it is for once the occasion for USA to show good example (after EU, Russia...) and USA remains the biggest polluter. It is therefore arrogant for a rich country like USA to claim that Stiglitz initiative is not feasible or desirable.
Posted by: Patrick d'Huart at October 4, 2006 04:31 AM
USA should understand that it will be painful to them when they decide to implement the kyoto protocol, but they must know it is the only viable option. Nothing good comes easy. If US trade partners agree to implement this duties, they will succeed. What then will the USA do. Does USA need to wait until it is forced into accepting the kyoto protocol?
Posted by: Richard Ngetich at October 6, 2006 12:41 PM
Stiglitz is getting real considering that he has been both in inner circles of White House and the World Bank. The issue is not other countries generating greenhouse gases. It is about the United State being the major contributor but not committed at all to reducing the effect. Just imagine the fact that the atmospheric concentration of carbon dioxide and methane, according to the climatologists, has increased by 31% and 149% respectively above pre-industrial levels since 1750.
About three quarters of carbon dioxide emissions into the atmosphere results from anthropogenic [man-made] action of fossil fuel burning. Methane, the primary constituent of natural gas enters the atmosphere both from biological production and leaks from natural gas pipelines and other infrastructure. Currently the projected global temperatures may increase by 1.4 to 5.8 degrees Celsius between 1990 and 2010[IPCC]
The Kyoto protocol required the United States to reduce its total emissions to an average of 7% below the 1990 levels. Instead,the US opted for the flexible Clean Development Mechanism that has left alot of questions on our minds in the LDCs.
Clean Development Mechanisms allows industrialised countries to fund emissions reduction activities in developing countries as an alternative to domestic emission reduction. The questions we have to ask here are-Is the CDM taking into account the varying levels of emissions?, Are the emissions from Developing countries proportionate to the levels from Industrialised countries-for examples if the production of emissions in developing countries in Africa is 3% annually, will the desired effect be realised when United States funds reduction in these countries but maintains her 8% annual emissions creation?.
Super powers have to get real and use their 'hegemonic position' for the benefit of those in the developing countries. Stiglitz is just echoing the ignored voice of the LDCs.
Posted by: Paul Mayende at October 17, 2006 06:27 AM