Home > Top Story Archive > March 26, 2009
Top Story
The following story is from the March 26 issue of International
Trade Reporter
Current Reports:
Environment
Prospect of WTO Challenge to Climate Bill
No Excuse for Inaction by U.S., Official Says
The U.S. Congress can craft climate change legislation to protect energy-intensive industries such as cement and steel without running afoul of World Trade Organization rules that bar protectionism, a former WTO official said March 24.
“First, the WTO allows its members to adopt” climate legislation under exceptions that allow member countries to enact environmental protections, according to Joost Pauwelyn, international law professor for the Institute of International Development Studies in Geneva.
Pauwelyn, who advised WTO dispute panels and the WTO Appellate Body from 1996 to 2002, joined labor union, environmental, and industry representatives in debating how to protect U.S. industries in drafting climate legislation at a hearing held by the House Ways and Means Subcommittee on Trade.
“People should stop using the WTO as an excuse to block”
climate change legislation, according to Pauwelyn.
However, he acknowledged that protecting U.S. industries under climate legislation—whether by allocating free allowances to carbon-intensive sectors or by putting border taxes on imports from nations that do not take comparable action—would have to be carefully crafted to avoid a WTO challenge.
Pauwelyn and other witnesses agreed that the United States runs the risk of putting its cement and steel industries at a competitive disadvantage if it enacts greenhouse gas emissions curbs but China and other developing countries do not follow suit. But the former WTO official said that without the United States showing such leadership, there is no chance China, India, and other nations will ever take comparable actions.
Increasing Interest From Committee
The March 24 hearing came one day after a House Ways and Means Committee member, Rep. Lloyd Doggett (D-Texas), introduced legislation (H.R. 1666) to establish a new cost control board to reduce volatility in the initial years of any U.S. carbon market.
Members of the committee including its chairman, Rep. Charles Rangel
(D-N.Y.), have signaled they intend to play a role in any House climate legislation, now being drafted within the House Energy and Commerce Committee.
The chairman of that committee, Rep. Henry Waxman (D-Calif.), has vowed to mark up a climate bill by the Memorial Day congressional recess.
Rep. Sander Levin (D-Mich.), chairman of the Ways and Means Subcommittee on Trade, told reporters to expect the full committee and trade subcommittee to continue to play a role on the climate change issue. The full committee has scheduled a March 26 hearing, in part to discuss Doggett's bill.
Global Agreement Crucial
Dave Hamilton, the Sierra Club's director of global warming and energy programs, told Levin and other subcommittee members that China, India, and other fast-developing nations can be enticed to take action on their emissions—but only if the United States moves forward first.
“The best protection against leakage is a strong global agreement”
in which U.S. mandatory emissions cuts spur similar action by China and other fast-developing nations, Hamilton said.
To avoid “leakage” of jobs and industries overseas under a U.S. emissions cap, Congress could compensate vulnerable industries with free allowances, or permits, that companies would have to hold for the greenhouse gases they emit, Hamilton said.
Congress should include provisions to ensure that a number of factors are used in distributing the free allowances to reward the most energy-efficient companies, Hamilton said. Without such criteria, the free allowances could reward energy-intensive industries with “windfall profits”
that essentially reward the very companies that produce high levels of greenhouse gas emissions.
China Will Expand, USW Says
But Leo Gerard, international president of the United Steelworkers union, said the prospect of the United States acting unilaterally in cutting its own emissions before China does poses a serious threat to domestic steel and other industries.
If China does not follow suit with comparable action, it will be free to expand its steel and other energy-intensive industries, which will face no climate controls, “and then we're making the issue of global warming worse, not better,” Gerard said.
“Currently there is no scientific way to create cement or steel without making carbon,” Gerard said, “and we will always need steel or cement” to produce goods in the United States. If those domestic industries are not protected, “it will be more nails in our manufacturing coffin and making us just as reliant on those governments as we are now reliant on Mideast oil,”
Gerard said.
By Dean Scott
Contact the Webmaster at webmaster@bna.com
1801 S. Bell Street, Arlington, VA 22202 - Phone: 1-800-372-1033
Copyright © The Bureau of National Affairs, Inc. All Rights Reserved.
