By Alex Morales and Gaurav Singh
April 3 (Bloomberg) -- Global-warming policies being considered by the U.S. and Japan risk provoking trade barriers, Chinese and Indian officials said in interviews.
Protectionism, rejected yesterday by world leaders meeting in London, has been discussed in the U.S. Congress and in France as a response to the competitive advantage of developing nations like China that refuse to regulate greenhouse gases. Potential import fees could prompt trade retaliation, said Su Wei, China’s lead negotiator for a new global climate-protection treaty.
“If there’s going to be a border tax imposed, that would very much have the danger of triggering a trade war,” Su said in a telephone interview from Beijing. “That’s not something that we would be happy to see,” he said before the start of United Nations-led treaty talks in Bonn running to April 8.
China and the U.S., the biggest greenhouse-gas producers, are negotiating a new agreement to stem greenhouse gases with 190 countries. India and China reject emissions limits for developing nations, saying rich nations must act first.
“We should be very careful that climate change doesn’t become a peg on which we start hanging protectionist tendencies,” Shyam Saran, India’s special envoy on climate change, said in an interview in New Delhi two days ago.
President Barack Obama has said he’ll impose limits on domestic greenhouse gases. Because reducing the gases puts a cost on companies that rivals in unregulated countries don’t face, U.S. Energy Secretary Steven Chu said in March 17 testimony to the House science committee “we should look at considering perhaps duties that would offset that cost.”
Group of 20
The U.S. imported $337.8 billion of Chinese goods in 2008, according the U.S. Department of Commerce. India exported about $21 billion to the U.S.
World leaders from the Group of 20 nations yesterday reiterated their rejection of protectionism, failing to take a tougher stance on proliferating trade barriers that threaten to deepen the global financial crisis.
“Increased protectionism is a sure ticket to a deeper economic downturn,” said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore.
Democratic lawmakers in the U.S. this week took steps to head off potential trade disputes. They proposed domestic climate legislation that would give rebates to energy-intensive steel and cement industries competing with cheaper imports.
Even so, the legislation would let the president impose border fees on imports if the rebates aren’t enough to keep U.S. companies competitive with foreign rivals.
‘Road to Protectionism’
Japan proposed an alternative to national caps that would apply to all countries. The most polluting industries would be given targets that would be divided among their companies. That approach hasn’t won favor among poorer countries such as India that reject any form of legally binding international target.
“It sounds very good to say we can’t agree on national level targets, so let’s agree on sectoral targets,” Saran said. “This could become the road to protectionism.”
Suggestions in the U.S. and France to tax imports won’t help coax developing nations into signing up to a new treaty, said Simon Retallack, head of climate at the Institute for Public Policy Research in London. French President Nicolas Sarkozy on March 24 said a carbon tax on imports may be needed to help European nations recover from the economic slump.
“Developing countries are concerned about those sorts of proposals, and they have good reason,” Retallack said today in a telephone interview. “It won’t be terribly helpful in persuading developing countries to take action.”
To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Gaurav Singh in New Delhi at gsingh31@bloomberg.net.
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