USTR Responds to Congressional Concerns About Linkage of Climate Change and U.S. Trade Policies
U.S. Trade Representative Kirk recently responded to a letter from the Ranking1 Member of the House Energy and Commerce Committee, as well as the Ranking1 Members from three Science and Technology Committee Subcommittees, regarding their concerns about the Obama Administration's linkage of U.S. efforts to address climate change and U.S. international trade policies and obligations.
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Representatives Express Concern About an Emissions-Related Trade Policy
The Representatives had written a letter to the USTR expressing concern about recent statements made by Energy Secretary Chu at a March 31, 2009 House Science and Technology hearing2. Secretary Chu had stated that the U.S was considering adjusting trade duties to protect domestic manufacturers, if China did not change its position against reducing emissions, so that U.S. industries would not be disadvantaged. The Representatives warned the USTR that any emissions-related trade policy would be extremely complicated and poor decisions could lead to destructive trade wars.
USTR Says Administration Does Not Support Any "Border Measures" at This Time
USTR Kirk responded to the Representatives' concerns by stating that the Administration is seeking to address the concerns raised in their letter, particularly by ensuring that the design and implementation of domestic energy and climate policy is compatible with U.S. international trade obligations and minimizes incentives for U.S. trading partners to pursue counter measures that could negatively impact U.S. exports. Kirk reassured the Representative that the Administration does not support any specific measures, including border measures3, at this time.
USTR Says Best Approach Would be a New UN Climate Change Agreement
However, USTR Kirk acknowledged that increased costs associated with carbon reductions could lead to competitive disadvantages vis--vis producers in countries that do not take action to reduce their carbon emissions. According to Kirk, any shift of production to other countries could lead to the unintended effect of only a limited or zero net decrease in global carbon emissions. Kirk further stated that since climate change is a global environmental challenge, the Administration wants to ensure that the U.S. response is not weakened by the failure of other countries to take action. The Administration, according to Kirk, believes that the best approach to address such concerns is to negotiate a new international climate change agreement in the United Nations that ensures that all the major emitters take long term, significant action to reduce their greenhouse gas emissions.
USTR Says Administration to Evaluate Options as it Engages Congress on Domestic Climate Change Policy
USTR Kirk concluded his response by noting that as the Administration moves forward with its engagement with Congress on the design of domestic climate change policy, it will evaluate the various options to address the concerns under consideration on Capitol Hill.
1Republican
2on the Role of Research in Addressing Climate in Transportation Infrastructure.
3The House Energy and Commerce Committee leaders' discussion draft of clean energy legislation, entitled the American Clean Energy and Security Act of 2009, contains a provision that would allow sectors that use large amounts of energy and produce commodities that are traded globally to be eligible to receive rebates to compensate for additional costs incurred under the discussion draft's proposed plan. The draft would allow the President, if he found that the rebate provisions were insufficient to correct competitive imbalances, to establish a "border adjustment" program under which foreign manufacturers and importers would be required to pay for and hold special allowances to "cover" the carbon contained in U.S.-bound products.
(See ITT's Online Archives or 04/01/09 news, 09040105, for BP summary of discussion draft.
See ITT's Online Archives or 04/22/09 news, 09042220, for BP summary of the Energy and Commerce Committee's four-day series of hearings on the discussion draft.)
Kirk letter (dated 04/14/09) available at http://www.ustr.gov/assets/Document_Library/Letters_to_Congress/2009/asset_upload_file224_15579.pdf.
Representatives letter to USTR Kirk available at http://republicans.energycommerce.house.gov/Media/file/Letters/032609_Letter_to_Kirk_on_Trade_and_Emissions.pdf.