The Energy 202: Advocates want Biden to use trade deals to combat climate change

By Alexandra Ellerbeck; January 20, 2021; Washington Post

Climate change has not been a major feature in U.S. trade agreements. That may change under President-elect Joe Biden. Biden on the campaign trail called for conditioning future trade agreements on partners’ ability to meet their climate targets under the Paris climate agreement, which he plans to rejoin when he enters office Wednesday.

Environmental advocates, trade experts and lawyers told me this shift will help build a global consensus to avert the worst effects of climate change, even though it may rattle certain allies. It will allow Biden to beef up environmental standards at home without the risk of American businesses losing out to companies that operate in countries with laxer environmental standards, they say. 

“The Biden administration wants to have a trading system where people are not advantaged by declining to follow through on commitments they've made to any number of issues, but notably on climate change in the 2015 Paris agreement,” said Daniel Esty, a professor at Yale Law School with expertise in environment and trade policy. 

The shift under Biden could spell a major change in the country's trade approach. 

The issue could come to a head sooner than later: More than 100 lawmakers sent a letter yesterday urging Biden to add Paris commitments to the U.S.-Mexico-Canada trade deal.

“Such an action would help restore the United States’ role as a leader in addressing the climate crisis and demonstrate how trade agreements can be utilized to advance climate goals,” the members write.

Rep. Earl Blumenauer (D-Ore.), who leads the House Ways and Means subcommittee on trade, points out that a simple majority in Congress can approve new multilateral environmental agreements under the deal. Blumenauer hopes the Biden administration takes advantage of that.

After all, although the United States routinely signs trade agreements that include environmental provisions, critics say that those commitments lack teeth. 

And the U.S. trade record is even more sparse when it comes to climate change issues specifically. Republicans in 2016 successfully pushed for a measure to limit the fast-tracking of any deals that require domestic carbon cuts. When the U.S.-Mexico-Canada trade deal was signed two years later under President Trump, its language made no explicit mention of climate change. 

And environmentalists were part of a coalition of interest groups that helped sink the Obama administration's proposed trade agreement with other Pacific Rim countries, the Trans-Pacific Partnership, over concerns it made it too easy for corporations to pollute abroad. 

Still, Biden campaigned on working with U.S. allies to use trade to combat climate change “without offering too many specifics,” said Alexandra Stark, a senior researcher at the New America think tank. 

Biden’s choice for chief trade negotiator will have her work cut out for her. 

Katherine Tai, who Biden chose to be U.S. trade representative, has a history of pushing behind the scenes for strong environmental standards.

Tai, who serves as the chief trade counsel on the House Ways and Means Committee, played a central role in negotiations around revising the North American Free Trade Agreement during the Trump administration. The resulting deal was criticized on the left for leaving out any mention of climate, but activists and politicians say that was despite her efforts.  

“I’ve seen her push ardently for environmental priorities to be taken seriously and, in fact, implemented in trade agreements,” said Ben Beachy, director of the living economy program at the Sierra Club, an environmental group.  

Europe probably will force Biden to take a stand.

The European Union is working to put in place a carbon border tax. Under this system, countries that have not already set a carbon price of their own may find that those prices are added in when they export their goods to Europe. It’s a change that could have major repercussions for American industries, and it could spur discussions in the United States about how to avoid the fees — either by putting in place a domestic carbon price or coming up with an alternative treaty arrangement.   

“The U.S. will have to respond,” said Maria Panezi, a professor of international trade law at the University of New Brunswick in Canada. “Given how quickly the European Union moves on this issue, their hand will be forced.” 

Biden has moved away from pushing for a carbon price, instead focusing on economic stimulus and investments in green energy. At the same time, his energy plan calls for imposing “adjustment fees or quotas on carbon-intensive goods from countries that are failing to meet their climate and environmental obligations.”  

Panezi suggests that this might be a difficult needle to thread: The World Trade Organization allows countries to impose adjustment fees on imports only if they already have their own domestic restrictions. “You have to clean up your own backyard first,” Panezi puts it.  

One option for the Biden administration would be to embrace legislation sponsored by Blumenauer that would impose a carbon tax in the United States and carbon tariffs for imported goods.  

“There's going be an argument that something like 50 other countries now have pricing mechanisms as part of their climate change strategies [and] American exporters will be at risk of facing carbon charges,” said Esty, who was floated as a possible contender to lead the Environmental Protection Agency last year. 

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