Wednesday, December 16, 2009

Copenhagen Update: Three(!) Carbon Tariff Alternatives?

Another day has come to a close in Copenhagen, and still no consensus on what to do about trade measures in the final text of a UN climate change agreement. Indeed, according to the International Centre for Trade and Sustainable Development (ICTSD), there are now three alternatives for text on carbon tariffs:
The text on the potential economic and social consequences of response measures taken in response to climate change now includes three options on how to address the question of border carbon measures. The first option is strong language prohibiting their use. The second is simple language referring to the principles of the climate convention.

The third option - considered the compromise alternative - emphasises the specific language in the Convention so as to create a level of comfort for countries concerned with unilateral measures that the United States is contemplating in their national legislation. Finally, this text also includes a bracketed paragraph that would establish a forum with an array of functions, including identifying and evaluating the effects of response measures, both positive and negative. The power and extent of this forum has yet to be defined, but has been the subject of much debate in the negotiations.
I discussed the first option yesterday, and offered my opinion (based on that text and unflinching support for it from China) that the US might have to relent on carbon tariffs in order to secure a final climate deal. But now that I see there are actually three alternatives - ranging from an outright ban on carbon tariffs to complete, non-binding fluff - I'd like to offer another possible outcome to the carbon tariffs debate at Copenhagen: a diplomatic punt to the next round of negotiations.  This appears to be the third option outlined by ICTSD, and considering how fragile all of the talks are - and that they probably won't result in much of anything that's actually binding (politically or otherwise) - a flaccid decision to identify and evaluate the effects of carbon tariffs, "both positive and negative," seems a highly plausible outcome.

Furthermore, Keith Johnson over at the WSJ's Environmental Capital blog makes a very solid response to my point yesterday that strong US resistance to anti-tariffs language could very well be a negotiating ploy.  Johnson points out statements by Senator John Kerry today - a supporter of eco-protectionism himself - on the need for carbon tariffs language in any final Senate climate bill in order to get protectionist Democrats like Sherrod Brown (D-OH) on board.  Afterall, any final Copenhagen agreement will need to be ratified by Congress and implemented through domestic legislation. 

I'm still not sold that Kerry also isn't posturing - and using Sherrod Brown to do it.  But given his statements and the alternative draft language on border measures, I also think it's possible that a nice, deep punt on the issue will end up ruling the day.

So in other words, it's anybody's guess how this mess works itself out.  But we should know Friday, right?


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