Guest essay by Eric Worrall

According to Foreign Policy, next time the “opportunity opens up”, the USA and European Union should unite to impose carbon taxes on the entire world.

Climate Change Is Coming for Global Trade

As sea levels rise and storms become fiercer, container shipping could be in for major disruptions.

BY JOSEPH CURTIN | NOVEMBER 16, 2019, 3:07 PM

After the cold fall winds swirling around Hurricane Sandy pushed an enormous storm surge toward the New York and New Jersey coastlines several years ago, the ensuing damage left an indelible imprint on the public imagination. Restaurants with ocean views were battered by wild waves, homes were rent asunder, and historic lighthouses were pummeled into piles of rubble. New York City was paralyzed for days, and some 40,000 people were left homeless.

The dramatic destruction garnered 24-hour media coverage, but the damage to international trade slipped more quietly under the radar.

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Perhaps more important, the rapid growth of international trade also makes striking an effective global climate agreement more difficult. China’s emergence as a trading superpower has given rise to fears of so-called “carbon leakage,” which occurs when costs related to complying with climate policies drive businesses to transfer production overseas in pursuit of laxer rules. If the European Union or United States makes polluters pay for their greenhouse gas emissions, the fear is that the polluters would simply offshore production to China or another emerging economy, yielding no net environmental benefit. But if developed countries don’t act, emerging economies never will.

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A carbon tariff has received considerable attention on both sides of the Atlantic as a means of addressing carbon leakage and breaking the deadlock of international climate action. Such a scheme would involve applying a tariff to imports from countries that have not already accounted for their carbon emissions. However, past efforts to set up a border adjustment have been resisted.

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Given these political developments, it is worth considering the prospect for a coordinated EU-U.S. initiative when the next window of opportunity opens up. Coming from the two largest markets in the world, whose economies are responsible for approximately half of global GDP, a joint carbon border tax would represent a seismic shift in international climate diplomacy.

From an EU perspective, the benefit of joint action is clear—it would remove the risk of retaliation from the United States. From a U.S. perspective, the main benefit would be to win a solid ally in its increasingly frayed trading and geopolitical relationship with China. Acting with the EU could also help rejuvenate the United States’ standing as a global climate leader, whereas going it alone risks associating border taxes with strong-arm tactics. Another major benefit of working together on such a carbon initiative would be to bolster the trans-Atlantic relationship, which is—according to many commentators—in crisis.

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Read more: https://foreignpolicy.com/2019/11/16/climate-change-disrupt-global-container-shipping-trade-policymakers-take-note/

Carbon leakage is the green policy inspired loss of jobs and businesses to countries with lower energy costs.

If you have never heard of “carbon leakage”, this allegedly not a problem receives a lot of attention in Europe, so it is likely a very serious problem indeed.

The European Union’s proposed response to carbon leakage is to try to erect massive tariff barriers, to eliminate the competitive disadvantage created by their costly green energy policies. But the last time the EU and USA attempted joint action on carbon taxes, the Senate failed to pass the Clean Energy and Security Act which would have given President Obama the power the impose carbon tariffs on Chinese imports.

When Europe subsequently tried to go it alone, President Obama moved to block them – the prospect of unilateral European carbon taxes targeting the USA was too much even for President Obama.

Now European leaders dream of a future US president who is at least as radical on climate issues as President Obama was, so they can use the combined economic might of the USA and Europe to level the playing field, by imposing their climate ideology on the entire world.

Naturally European politicians would never dream of interfering in US politics to try to achieve this goal.