In the United States, the Senate is considering legislation authored by Sens. Joseph Lieberman, I.-Conn., and John Warner, R.-Va., to impose an ambitious cap-and-trade system designed to reduce carbon-dioxide emissions. Under the legislation, companies emitting carbon dioxide would be obliged to purchase credits for their emissions with the total number of these credits being reduced over time. After five years, foreign companies selling products in the United States would also be obliged to purchase credits, unless their home country adopted a similar system of carbon-dioxide emissions controls.
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Efforts to "share the burden" with restrictions on imports, like those envisioned in the Lieberman-Warner bill, are a practical necessity. Unfortunately, they are at most partial or delayed responses, would be difficult to administer and could easily run afoul of global trading rules under the World Trade Organization, resulting in potential trade sanctions. The WTO has cried foul over previous U.S. environmental statutes--most notably the 1990 Clean Air Act.
The ideal response to global warming would be a truly global policy response. Unfortunately, in the real world, that may not be achievable. Environmental realities may now dictate that the United States adopt legislation like Lieberman-Warner, but America should be resolved to face serious competitive realities and related international trade disputes when embarking on this course.
I agree with him that applying a cap-and-trade system to imports "could easily run afoul" of WTO rules. I noticed that during a recent debate, Barack Obama said he favored a cap-and-trade system. Although he has a long way to go before being elected, he is looking good right now, which means these issues might become more than just theoretical in the near future.
