July 11, 2009

On the Road to Copenhagen

FROM-Energy Tribune

China On Carbon Tariffs: Drop Dead

It didn’t take long. On July 5, just nine days after the House passed the cap and trade bill (also known as Waxman-Markey) Chinese officials made it clear they are opposed to any carbon taxation scheme. Yao Jian, the spokesman for China’s Commerce Ministry, said the bill violates basic principles of the World Trade Organization and said that the ruse of environmental protection was being used to protect trade and that it could induce a trade war.
“China considers that the carbon emission tax not only violates the basic principle of WTO, it also violates the principles of the Kyoto Protocol about different responsibility between developing and developed countries.” Yao said.

In March, Energy Secretary Steven Chu said that the US was planning to impose a tariff on imported products to avoid unfair competition imposed on the American manufacture industry. There is a clause in the cap and trade bill – officially known as the American Clean Energy and Security Act (H.R. 2454) – that allows the imposition of a “special tax” which stipulates that imported foreign products that do not meet the US emission standard can be heavily penalized. The Chinese are worried that this provision may be copied by European and other countries, and lead to more trade protectionism.

Studies done by the universities in Beijing and Shanghai have concluded that carbon emission taxes in the US and other countries will gravely affect China’s economy, affecting especially the paper, steel, cement, fertilizer and glass industries. Their point is clear: developed countries have moved dirty industries to developing countries, and now the carbon dioxide emissions from those industries are being considered “pollution.” The Chinese believe that the developed countries should also pay for part of Chinese emissions since they benefit from China’s industries. Furthermore, they see a carbon tax as a new style of developed world economic hegemony over developing countries.

Yao warned that carbon emission legislations will only harass the international trading order. And he said that a carbon tax will not help the world get through the economic crisis, nor will it help the effort on climate change negotiations. “China” he concluded, “is strongly against the carbon emission tax.”


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