A group of 19 Senate Republicans is calling on President Joe Biden to “safeguard” U.S. commercial interests and oppose the European Union’s plan to impose “carbon tariffs” against countries that lack aggressive emissions-reduction policies.
The EU last month unveiled a carbon border adjustment proposal as a way to prevent domestic industries from moving overseas in order to escape the bloc’s aggressive plans to raise the price of using fossil fuels.
The long-anticipated move inaugurated a new form of protectionist trade policy linked to addressing climate change.
THE EU AND US DIP INTO A CARBON TRADE FIGHT
Senate Republicans led by Sen. Kevin Cramer of North Dakota wrote a letter to Biden, exclusively shared with the Washington Examiner, warning the EU’s plan is “unfair to the U.S.” and would harm small manufacturers of products targeted by the scheme, such as steel, aluminum, cement, electricity, and fertilizer.
They called it a “guise to promote green protectionism.”
“Instead of punishing U.S. imports, our European allies should work with us to advance a common approach in curbing overseas emissions, particularly those from China,” wrote the Republicans, who also include Dan Sullivan of Alaska, Marco Rubio of Florida, John Barrasso of Wyoming, Tim Scott of South Carolina, John Cornyn of Texas, and more.
The Senate Republicans did not comment in the letter on a similar proposal by Senate Democrats as part of a sprawling $3.5 trillion infrastructure and climate spending package to impose a “polluter import fee” on exporters of carbon-intensive goods, though it is far less detailed than the EU’s plan.
Sen. Chuck Schumer, the majority leader, said he included the tariff as a way to work with the EU to combat pollution from China, which has the most carbon-intensive economy.
The Republicans acknowledge the EU’s proposal would not be detrimental to American companies initially, because U.S. heavy industries, especially steel, already have an advantage over China, India, and even Europe in producing goods and services at lower rates of carbon emissions. The EU is giving trade partners time to adjust, requiring importers to begin monitoring and reporting the carbon content of imported products in 2023 and start paying in 2026.
But the Republicans say the EU plan would likely expand in scope over time to include more product types, creating a “significant burden” on U.S. industry.
From the EU’s perspective, imposing a matching border carbon adjustment to coincide with its emissions trading scheme, which launched in 2005, is essential to avoid harming the competitiveness of European industries.
If exporters of carbon-intensive goods have to pay a fee equivalent to the same price per metric ton of carbon as the EU’s emissions trading market, it would remove the incentive for companies to move overseas to avoid paying the domestic fee.
Biden’s climate envoy John Kerry initially opposed the EU’s import tax, warning it should be a “last resort” that could inflame tensions ahead of pivotal United Nations climate negotiations in November.
But the Biden administration has since pivoted to accept the EU’s move as inevitable and acknowledge that it could be helpful in prodding high-polluting countries such as China to boost its climate mitigation efforts.
Senate Republicans, however, criticized the EU’s “lack of ‘flexibility'” in recognizing emissions reductions achieved in economies lacking a carbon price such as the United States.
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The EU has not committed to grant the U.S. exemptions from carbon tariffs.
