The Kerry‐Lieberman‐Graham (is he still part of these efforts?) climate bill summary has been leaked. I’m sure my colleague Pat Michaels will weigh in on its contents soon, but in the meantime I thought I would comment on the trade‐related aspects of the bill, or at least the summary that is now in the public domain.
As Scott Lincicome points out, the drafters have gone to great pains to emphasize that this bill is, like, totally about saving the environment. (Which, by the way, is a bit of a turnaround). I’ve blogged before about why advocates of “border adjustment measures” need to be careful about the justification they offer. In short, the World Trade Organization does not look too kindly upon disguised protectionism, and any legal challengers would probably use things like, say, press releases touting the (traditional) protective benefits of carbon tariffs as evidence of U.S. wrongdoing. The House bill fell short in that regard, with lots of talk about equalizing costs etc, and apparently the sponsors of the Senate bill have learned from warnings from trade experts. Not completely, though. Here’s Scott on their efforts to be more careful, and why they fall short:
The bill’s short summary (available here) also follows [a] new “green” road‐map…:
In order to protect the environmental goals of the bill, we phase in a WTO‐consistent border adjustment mechanism. In the event that no global agreement on climate change is reached, the bill requires imports from countries that have not taken action to limit emissions to pay a comparable amount at the border to avoid carbon leakage and ensure we are able to achieve our environmental objectives.
You couldn’t shoehorn more “environmental” references into this summary if you tried. Only one small problem: this strictly “environmental” summary falls clearly under the main heading “Expanding America’s Manufacturing Base,” and the long summary of Sections 775–777 above comes under the main heading “Subtitle A — Protecting American Manufacturing Jobs and Preventing Carbon Leakage.” So did the Senate drafters really just take all that time purging all of the scary “competitiveness” language from their new bill’s carbon tariffs provisions, only to keep them under a legislative subtitle that expressly denotes provisions dealing with domestic industrial competitiveness?
Scott’s right, but I found the heading in the bill’s long summary even more blatant: Title IV, under which the international provisions are explained, is called “Job Protection and Growth”. Call me overly cautious, but I don’t think having the phrase “job protection” as the first words in the title on border measures is a good way to hide your intent from the WTO or, for that matter, your increasingly‐fractious trade partners.
