Among the least-discussed flaws in the Obama-Waxman-Markey cap-and-trade bill that recently passed the House and pending in the Senate is the serious damage it will inflict upon international commerce and trade. Steven Chu, President Obama’s energy secretary, warned in March that “if other countries don’t impose a cost on carbon, then we will be at a disadvantage.” To compensate, the argument goes, we would impose penalties – aka “tariffs” – on products bought by Americans and produced in other countries that don’t abide by politically correct limits on carbon emissions.
This is why the bill would undermine America’s legitimate overseas interests by authorizing carbon tariffs against products produced by our new global competitors like China and India, which refuse to participate in anti-global warming schemes. These same countries would in turn impose retaliatory tariffs on American exports that, like virtually all tariffs, would ultimately harm businesses, workers and consumers here at home.
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Policymakers need only go back to the dishonorable history of the Smoot Hawley tariff of 1930 that was designed to protect American industry and revive the economy from the then-young Great Depression. Instead, Smoot-Hawley constrained growth, with spiraling unemployment and widespread misery the result. There is every reason to expect a similar result today if Obama-Waxman-Markey becomes law. India made it crystal clear during Secretary of State Hillary Clinton’s July visit there that the world’s largest democracy has no plans to join any anti-emissions schemes that reduce economic growth.
With anti-Americanism on the rise throughout Europe, Russia resurgent, and China on the rise, it helps to have allies like India that are willing to forge meaningful economic and military ties. But Obama-Waxman-Markey could jeopardize this relationship even as the measure does next to nothing to curb global warming. Moreover, a wave of new scientific studies are casting growing doubts about the legitimacy of global warming claims made by big-name outfits such as the UN’s Inter-governmental Protocol on Climate Change (IPCC).
Senators now preparing to take up the House-passed version of Obama-Waxman-Markey should heed the miserable failure of cap-and-trade in the European Union. France has proposed that such tariffs be imposed against non-EU nations that do not submit to a new deal on climate change. A top German official has described the proposed U.S. carbon tax as “a new form of eco-imperialism.” Instead of mimicking self-destructive European practices, American leaders should roll back punitive energy regulations at home and bolster alliances that count abroad!
