Opinion and Editorial

Europe can use its environment policies to corner Trump

Barbara Unmüssig & Michael Kellner (Wide Angle)
Filed on June 6, 2018

Policies such as border carbon adjustment are not narrow-minded national protectionism, but a necessary reaction by some countries.

As US President Donald Trump translates his "America First" strategy into import tariffs, and the European Union prepares to adopt countermeasures moving the global economy toward a trade standoff, the real challenge facing the two economies - indeed, the entire world - is being ignored. That challenge is to shape the global economy, including trade, so that it finally respects the planet's natural boundaries.

Trump's trade agenda is putting progressives into a paradoxical position. For many years, they have been denouncing the current trade system as both unjust and ecologically destructive. But in the face of Trump's nationalist protectionism, with its echoes of the fatal mistakes of the 1930s, some feel obliged to defend the system.

Neoliberal defenders of the status quo now see a political opportunity. Lumping progressives together with Trump as "protectionists," they are denouncing the justified protests of civil society against mega-regional deals like the Comprehensive Economic and Trade Agreement between the EU and Canada, and the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States.

In order for progressive politics to succeed, its proponents need to go beyond defending the existing trade system against Trump. They need to go on the offensive, which means pressing for reforms intended to create a just, equitable, and rules-based international trade order. Otherwise, Trump-style economic nationalism will continue to resonate with a large share of the population, in the US and elsewhere.

For starters, with the EU debating countermeasures to US tariffs, it is worth looking beyond the economic significance of the dispute, to the ecological aspects of the commodities in question. For example, steel production, which uses metallurgical or "coking" coal, accounts for roughly 5 per cent of global CO2 emissions.

This is not inevitable. Steel can be replaced by less emissions-intensive alternative materials. It can also be produced with much lower emissions. Swedish producers are researching virtually CO2-free steel production using electricity and hydrogen acquired from renewable energy sources. And the German multinational Thyssenkrupp is developing a process using exhaust fumes from steel production as a feedstock for chemical products and synthetic natural gas, lowering carbon pollution.

But these alternatives will not be viable as long as the established steel industry is permitted to use the atmosphere as a free dump for CO2 emissions. Economists across the political spectrum agree that one key to limiting greenhouse-gas emissions is to make it more expensive for companies to produce them - so expensive that climate-friendly options become cheaper in comparison, and thus competitive. That is why the German Green party is calling for a floor price on CO2 emissions to be established as part of the EU's Emissions Trading System.

Such proposals have met with strong resistance. Many argue that a high price for emissions in Europe would give foreign producers a competitive edge in the EU market. Moreover, because production would simply move abroad, the logic goes, the environment would ultimately be no better off.

Despite its weaknesses, this argument has impressed European policymakers. But there is an obvious workaround: a duty could be imposed on emissions-intensive imports - like steel, cement, and aluminum -- at the EU border. This would be an important step toward a just, climate-responsive trading system. The duty would be fair, because environmental rules would apply equally to European and foreign products. And as long as the same levies were imposed on locally produced goods, such "border carbon adjustment" would not violate World Trade Organisation rules.

With a calibrated and forward-thinking response to Trump's narrow-minded protectionism, the EU would cement its role as a trailblazer in the quest for more sustainable trading system. In doing so, it would not only help protect the environment on which we all depend, but also boost its own international clout. That, not a trade war, is what the world needs now. -Project Syndicate.

Barbara Unmüssig is President of the Heinrich Böll Foundation and Michael Kellner is Secretary General of the German Green Party

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