Many of you know Mona Paulsen as the Queen of Trade Law Archival Research, but she is also a scholarly tech innovator, having convinced the stodgy folks at Cambridge University Press to do a video discussion for a World Trade Review written debate series on carbon border adjustments. In this debate, Tim Meyer and Todd Tucker have a WTR piece in which they offer their vision for a "A Pragmatic Approach to Carbon Border Measures." I provided a rejoinder here, to which Tim and Todd gave a final response. The video of us discussing all this is here.
To summarize my main points briefly:
-- Tim and Todd propose a "carbon customs union in which countries with a diverse range of high-ambition domestic climate measures would adopt a common external tariff on carbon intensive imports from countries outside the union." To me, this proposal comes across as an exclusive club that only wealthy countries can join, with financial penalties imposed on everyone else. I think that a better way for the U.S. to lead on reducing climate emissions would be to acknowledge the history (i.e., that we are the leading source of carbon emissions historically), engage in a good faith negotiation to convince everyone to take steps to reduce carbon emissions, and offer monetary and technical assistance to developing countries who are struggling with how to balance their industrialization objectives with the goal of reducing carbon emissions.
-- Tim and Todd want to use Section 232 as the mechanism to impose their carbon tariffs. In my view, however, Section 232 is not well-suited to this task, for a number of reasons: the Commerce Department is not the right institution for the task; given the recent abuse of this provision, I don't think the Biden administration will be able to convince other countries that they are using it in good faith, rather than just another excuse for protectionism as the U.S. devolves further into economic nationalism; and any action on carbon emissions has to start with domestic measures anyway, and a border tax measure could be included in whatever domestic legislation is adopted, rather than invoking Section 232.
-- I'm not sure how pragmatic what they are proposing is. For example, they suggest that the steel industry will support a plan for total decarbonization of their production, but I don't see evidence of that.
-- In my view, one key to success here is truth-telling. Ordinary people are not going to get behind action to address carbon emissions unless political leaders level with them. Todd tweeted a quote from Senator Ron Wyden recently in which Wyden said: "I will make sure as chairman of the Senate Finance Committee that no carbon policy hits working people and working families." The problem with this statement is that a carbon policy that does not have some degree of negative impact on "working people and working families" will be totally ineffective. Whether the domestic measure is a tax or a regulation, there will be costs, and some will be borne by "working people and working families." It's hard to convince people that climate is an "existential threat" when you are also telling them that it's easily solved and that the solutions will create 20 million jobs. So just be straight with people. It's the only way.
