Cap and Trade Will Not Work: China

By Stormy

China will not cooperate with any cap and trade in greenhouse gases, even though in terms of absolute emissions, China exceeds that of the U.S. In terms of per capita pollution, China is still behind. Nonetheless, any attempt to penalize China’s exports because of carbon emissions may start a trade war:

Li [Gao, director of China’s climate change office] said it would be a “disaster” – and possibly the start of a trade war – for the U.S. to impose tariffs on imports from China or other countries that didn’t have mandatory emissions controls. He said the tariffs would be unfair and a violation of trade rules.

China shouldn’t have to take responsibility for the 15 percent to 25 percent of its emissions that result from making products for the rest of the world, said Li, the director of the Department of Climate Change in China’s National Development and Reform Commission. He spoke at a briefing sponsored by the Pew Center on Global Climate Change, a nonpartisan research organization.

“For many developing countries, not only China, we produce the products for the consumers, especially in developed countries,” Li said. He argued it wouldn’t be fair to hold China accountable because “we are on the lower end of the economic chain of the global economy.”

China has, of course, been preparing itself for any abatement of the present economic crisis: Investing heavily in upgrading plants and infrastructure, training workers, and scooping up resources and companies around the world.

By the time the economic mess is passed…or passing…, we will have to face the hardest test: global pollution and warming.

Any discussion of cap and trade without dealing with trade and the WTO is just modeling with air. As Li so aptly says: “Any penalty attached to its exports will be a violation of ‘trade rules.'”

There you have it, in a nutshell.

How can free traders–and tariff deniers–who accept the seriousness of global warming get around this one?

[Note: On reflection–and not yet reading any comments–, I would agree with those who find some of the conclusions in this piece highly questionable, most specifically the last sentence. Nonetheless, I think that China may well be the key to any agreement on reducing carbon emissions, even assuming the more advanced countries take the lead. Furthermore, if cap and trade is adopted, might not that be an additional subsidy for those companies to locate there?]