Holding a bill hostage

WE SAY A deeper look at the senators’ climate change proposal reveals a flaw in logic.

In yet another blow to President Obama’s pending climate change bill, a group of 10 senators has issued a statement vowing not to support any bill if it “did not protect American industries from competition from countries that did not impose similar restraints on climate-altering gases.” The most salient “protection” suggested seems to be import tariffs.

Experts believe that without the support of these 10 senators, the bill will not pass.

At the core of this issue lies a question in the debate over climate change legislation: What cost should developing countries bear in order to spearhead the initiative, which has shared benefits for the rest of the world, especially in the face of increasing competition from developing nations?  

We’ve already seen the tepid response of many developing countries, for whom the abstract threat of climate change is a concern far less important than security and growth. China and India already have no qualms with polluting their own skies now, much less with allowing a little runoff from an ice cap at the end of the world.

The senators rightly point out that if we impose costs on manufacturers in America, it will make their goods more costly, which will in turn discourage buyers from selecting their products, which will make America less economically competitive.

However, what the senators propose will only exacerbate the problem, even if they will confer some benefit to the manufacturing industries dominant in the states these legislators represent.

Whereas increasing the costs faced by domestic steel plants will only hurt the steel plants themselves, taxing imported steel hurts every domestic industry that buys steel and will not make domestic steel any more attractive as an export.

Worse yet, tariffs on imported steel will discourage foreign companies from building plants in America (as they will be penalized for not buying domestic goods) and encourage American businesses reliant on steel to move overseas, to less litigious countries – probably to the very countries whose environmentally unfriendly steel production caused the tariffs in the first place.

However, that isn’t to say the bill should necessarily be passed in present form. America shouldn’t be tasked with reducing climate change solely at its own expense.
The entire dilemma is a massive free-rider problem, in which all countries agree that climate change needs to be avoided and yet are reluctant to contribute individually. Without multilateral diplomacy, industrial solutions to climate change will always be unattractive.

Though tariffs can only be selectively implemented, and can have negative repercussions, there are better industrial solutions to climate change. Perhaps the best of which is for First-World countries to pay for emissions reduction in developing countries, which have yet to implement many of the cheapest (and most effective) technologies.

It’s a better idea than imposing harsher standards on American companies, for whom every dollar of emissions control does only a fraction of the good it would do overseas. These senators, however, seem to be more interested in passing the buck than spending it where it counts.