Stalled bill that would levy surcharge on imports with higher ‘pollution intensity’ than U.S.-made products could emerge as tool in president’s trade policies.
Some Senate Republicans want to give President Donald Trump another arrow to add to his tariff quiver in negotiating trade deals—a “foreign pollution fee” levied against imports with higher “pollution intensity” than similar products made in the United States.
Cassidy said that with Trump speculating about levying surcharges of up to 25 percent on goods from Canada and Mexico, and anywhere from 10 percent to 60 percent on imports from China, a foreign pollution fee “would be a tariff that would be thoroughly defensible.”
While the Biden administration pushed renewable energies to meet decarbonization goals, spurring inflationary capital improvement costs on U.S. utilities and manufacturers, other nations did not similarly self-shackle, Cassidy said.
“One thing I’ve been concerned about is, countries like China do not enforce international standards on controlling pollution,” he said. “That lowers the cost of manufacturing as much as 20 percent, incentivizing manufacturers to leave our country and move there.
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“Then we get the loss of jobs, but also all the air pollution that blows over to our West Coast. I think I read 20 percent of the smog in California is related to emissions from China.”
“China, they use a lot of dirty energy, but they produce a lot of energy, and when that stuff goes up in the air, it doesn’t stay there,” he said. “It’s not like you have a wall—we love walls, by the way—it just doesn’t [stop at borders].
“It floats into the United States of America after 3 1/2 to 5 1/2 days. It floats across the oceans, and it comes right over your neighborhood, and it falls into your neighborhood.”
Trump said U.S. producers extract oil, gas, and minerals under more environmentally strident regulations than most trading partners, especially China, and its natural gas emits fewer pollutants than rival producers, most notably Russia.
“They all say we have to fight for cleaner air, but dirty air is dropping all over us,” he said. “So what are they talking about? Unless everybody does it, it just doesn’t work.”
Whether Trump is using tariffs as leverage in negotiating trade deals, as revenue generators, or both will be evident soon, but boosting U.S. natural gas production and increasing liquified natural gas (LNG) exports is a cherry he is dangling in exchange for favorable pacts.
A crew works on a natural gas rig in Zelienople, Pa., in 2012 after the “shale revolution” fostered by advances in fracking technologies unleashed a natural gas boom in the United States. Keith Srakocic/AP Photo
Fee Would Even Playing Field
The United States is the world’s largest LNG exporter. Under the Biden administration, however, exports were paused to study whether shipping fuel overseas was in domestic consumers’ “public interest” and whether exports would accelerate global greenhouse gas emissions.
Critics argue the LNG pause disrupted domestic production by creating uncertainty among investors about financing infrastructure projects such as pipelines and port terminals—creating a possible capacity shortfall in coming years—and was contrary to former President Joe Biden’s own decarbonization goals.
Cassidy said assessing a “polluter fee” on countries using “dirty” energy not in compliance with United Nations and World Trade Organization (WTO) agreements would ensure that “our industry is competitive in terms of controlling our emissions in accordance with the law, which then gives us that advantage relative to those competitors arbitraging those rules.”
Cassidy and Graham, in a press release, stated that the Chinese Communist Party is exploiting “loopholes” in a trade system that “compensates them for their poor pollution record” while the United States is punished for its “stellar environmental record.”
“This combination undercuts U.S. manufacturing domestically and abroad causing the loss of millions of U.S. jobs and dependency on problematic supply chains,” the statement reads.
The bill leaves rulemaking, such as calculating pollution intensity, to the Department of the Treasury and the Department of Energy’s National Laboratory system. The Office of the U.S. Trade Representative would monitor for circumvention. U.S. Customs and Border Protection would collect the fee.
The World Trade Organization headquarters in Geneva on April 12, 2018. Fabrice Coffrini/AFP/Getty Images
Fee Would Be Challenged
Cassidy and Graham said an FPF based on “national sectoral emissions averages” would confirm that U.S. energy is less carbon-intensive than global counterparts.
“Carbon leakage” refers to companies that move production to countries with less stringent environmental policies.
The Cassidy–Graham proposal doesn’t include domestic fees, “so it would be difficult for the United States to argue the FPF would comply with WTO rules,” the CSIS analysis states.
But according to Cassidy, those same rules allow “bad actors” to thrive while impoverishing compliant countries. He said it would level the field to slap a fee on certain products “from a country like China roughly equal to their avoided cost of not complying with environmental regulations.”
“As the president speaks about tariffs, your position will be making sure our industry is competitive,” he said to Burgum during his nomination hearing, adding that an FPF would help do that.
Burgum was noncommittal.
Trump’s trade principle “is reciprocity,” he said.
“If you have access to our markets and we don’t have access to yours, or if you’re using unfair practices, if you’re dumping here, if you’re not doing reclamation, using child labor … to lower costs, that’s exactly the kind of place he [has] publicly spoken about,” Burgum said.
“He would want to have reciprocity with tariffs“ to penalize ”bad actors,” he said.
Original News Source Link – Epoch Times
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