US LEGISLATION to cut greenhouse gas emissions contains a provision that may reduce imports of Chinese goods by one-fifth, a World Bank study said. The provision, included in the measure passed by the US in June, would tax imports from countries that don’t enact curbs on carbon-dioxide emissions.
Senator Sherrod Brown of Ohio and representative Sander Levin of Michigan, both Democrats, say any legislation in the US to limit pollutants must include the so-called “border measures” to tax imports. “People haven’t thought through the full implications of those measures,” Aaditya Mattoo, a World Bank economist and one of the paper’s authors said.
The threat to imports should be part of what drives negotiations at global climate talks in Copenhagen this week, said Scott Paul, the executive director of the Alliance for American Manufacturing, which represents the United Steelworkers’ Union and US Steel.
“It shows that the right border measures would be effective,” Mr Paul said. “So it would be in the interest of India and China to participate” in any global agreement to cut emissions, he said. Advocates say the fees are needed to prevent price-undercutting by manufacturers in countries that won’t match US or EU climate-change standards.
The World Bank study says US and EU manufacturers of steel, cement, plastics, paper chemicals and other metal products have reason to be worried. If the US follows through on a pledge to cut emissions by 17 per cent, “producers of energy-intensive” goods “will witness erosion in their competitiveness, reflected in export and output declines”, the paper says. Their output could fall 4 per cent and exports by 12 per cent.
The prospect of that decline will prompt “tremendous pressure to address the competitiveness issue,” Mr Mattoo said. Depending on how the US and EU calculate taxes on imports, the effect on China and India would be that of a 20 per cent tariff, the World Bank analysis says. That new tax would cut 20 per cent from Chinese exports to the US, and 8 per cent from other developing nations, the report said. – (Bloomberg)