Trade Discord Fuels US, China Tension in Copenhagen

Bloomberg | December 15, 2009 | 16:11 EST

China is demanding that a global agreement to reduce greenhouse gases prohibit nations from imposing trade sanctions, further pitting the world’s No. 1 emitter against U.S. lawmakers. The draft accord from a meeting in Copenhagen to forge a climate treaty bars rich nations from adopting trade actions tied to global warming. China said such language will avert “trade wars.” The U.S. Chamber of Commerce sides with China. “We will always oppose any practice of establishing trade barriers under the guise of protecting the global environment,” Yu Qingtai, China’s climate change ambassador, said in an interview.

A proposed U.S. law would impose tariffs by 2020 on imports of certain goods from nations such as China seen as not doing enough to cut emissions. American politicians and labor groups say pending legislation to cut heat-trapping gases must include tariffs on such nations because they gain competitive advantage. The dispute between China and the U.S., which had record $268 billion surplus last year in China’s favor, illustrates how trade is emerging as a central issue dividing developed and developing countries at the United Nations gathering in the Danish capital.     Senators’ Opposition

With just a couple days before the close of the UN negotiations, the U.S. and China have failed to bridge differences over key issues such as how much wealthy economies should pay poorer countries to deal with global warming, emissions-reduction goals and how to ensure that countries live up to their pledges to curb climate change. U.S. senators such as Benjamin Cardin, a Maryland Democrat, say its “critical” that the U.S. retain its option to impose tariffs, or border-tax adjustments, on China and other countries. The Senate is the only U.S. body authorized to approve treaties. Labor groups in the U.S. including the AFL-CIO say the measure is crucial to protect domestic industries that might be undercut if other countries aren’t bearing the same environmental costs to produce products. “Goods produced in nations that do not abide by carbon emission restrictions should be subject to border adjustment tariffs to offset the loss,” AFL-CIO President Richard Trumka said in September. “I don’t see any other way to be serious” about global reductions.

Chamber with China

The U.S.’s biggest business lobbying group, the Chamber of Commerce, sides with China on the issue, warning that the climate-based trade measures could start a “green trade war. “ It’s something that certainly of concern to a lot of countries,’’ Stephen Eule, vice president for the chamber’s Institute for 21st Century Energy, said in an interview. It could ‘‘invite retaliation on the part of our trading partners.’’ In Copenhagen, the latest version of a proposed treaty includes language banning developed countries from ‘‘resorting’’ to climate-related trade measures is printed in brackets, meaning it lacks consensus agreement and must be dealt with by higher-level negotiators from 193 countries. An earlier draft didn’t include specific language. Rather, it stated that the matter would be dealt with later in the Dec. 7-18 negotiations. Yu said China and other emerging economies simply want outlined in a new treaty what he says already exists in the 1992 UN Framework Convention on Climate Change, the basic climate agreement governing the current talks.

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