Free Markets, Free People

trade war


How to start a trade war in one easy step

Decide, as the EU has, to unilaterally impose a carbon tax on airlines and watch what happens:

China has warned the European Union to abandon its controversial carbon tax on airlines or risk provoking a global trade war. Adding weight to the warning, an industry insider told the Financial Times that the Chinese government was seriously considering measures to hit back at the EU if it insists on charging international airlines for their carbon emissions. –Simon Rabinovitch, Financial Times, 22 December 2011

The US has threatened to take retaliatory action against the European Union unless Brussels drops its plan imminently to start charging any airline flying into the bloc for its carbon pollution. In a sharp escalation of tensions over Brussels’ move to bring aviation into its emissions trading system from January 1, Hilary Clinton, US Secretary of State, has written to her European Commission counterpart, Catherine Ashton, and other top commissioners, to “strongly urge” the EU to halt or suspend its plan. –Pilita Clark and Andrew Parker, Financial Times, 20 December 2011

The Indian government has asked the country’s airlines to refrain from submitting carbon emissions data to the European Union (EU) for a new tax that will become applicable from 1 January for flights to Europe, hardening its stand further against the imposition of the levy. — Tarun Shukla, Live Mint, 18 December 2011

The EU is already in financial trouble and now it wants to compound that problem by something as silly as a carbon tax to support a very specious premise concerning global warming.  It’s all about agenda politics and its timing couldn’t be worse given the financial crisis in the EU.  This is either EU stupidity or simply bureaucratic inertia, but in either case, the stances taken by the US, China and India are not particularly “mild”.  The attempt to impose the tax on January 1st could cause quite an uproar and a suspension of flights into the EU until the outcry makes them back off.   And, of course, it won’t be the airlines who pay the tax, will it?  It will be their customers. 

The EU has more problems than it can handle now.  Starting a trade war over a carbon tax would be the cherry on top of the “stupid” sundae.  But then, for years and contrary to logic, they thought “other people’s money” would never run out, didn’t they?

~McQ

Twitter: @McQandO


Climate Change Update – Falling Dominoes

For the American taxpayer, under the shadow of the recently passed House cap-and-trade (Waxman-Markey) bill, the news continues to be grim. However for the traitorous “deniers”, aka skeptics, who believe the whole climate change hysteria to be an economy killing farce, things are looking better.

For instance India has announced it will not participate in the Western world’s attempts to kill their own economies:

India said it will reject any new treaty to limit global warming that makes the country reduce greenhouse-gas emissions because that will undermine its energy consumption, transportation and food security.

Cutting back on climate-warming gases is a measure that instead must be taken by industrialized countries, and India is mobilizing developing nations to push that case, Environment Minister Jairam Ramesh told the media today in New Delhi.

“India will not accept any emission-reduction target — period,” Ramesh said. “This is a non-negotiable stand.”

Heh … fairly blunt and straight foward wouldn’t you say? Of course, China took the same stand a couple of weeks ago. I call that good news because it is another country which has decided to put its economy first and this nonsense second. When two countries which are or expected to be very soon the two leading emitters of CO2 say “no”, it makes it rather ridiculous for the rest of the world to say “yes” given the consequences vs. payoff, doesn’t it?

And the US cap-and-trade legislation? Well India sees that as a “no-go” as well:

But last week, the US House of Representatives backed a “border adjustment tax” to equalise carbon emissions charges between domestic production and imports from states that do not cap emissions. The legislation is likely to face tough opposition in the Senate.

Mr Ramesh denounced as “pernicious” US efforts to impose “trade penalties” on countries that do not match its carbon reduction moves.

Meanwhile in the EU:

The European Union risks driving industry out of the region if it continues to push for deeper cuts in carbon dioxide emissions than other economies, according to the chief executive of Eon, one of the world’s biggest renewable energy companies.

Wulf Bernotat, Eon’s chief executive, told the Financial Times that the EU was imposing higher energy costs on its industry than competing regions, and criticised the US for doing “basically nothing” to cut its carbon dioxide emissions.

He added that if there were no international deal to cut emissions agreed at the Copenhagen meeting at the end of the year, the EU would have to rethink its plans to take a lead in fighting the threat of climate change.

“It is a European political issue whether the European Union can continue to lead the policy process if the rest of the world is not joining in,” he said.

“We are adding additional costs to our industries, and if other countries don’t follow, then those industries will move to lower-cost regions.”

Yeah, like India or China … or Mexico. That’s the irony of this nonsense. We have a president and Congress who’ve made a cottage industry of demonizing corporations who “outsource” jobs while they pass legislation that encourages corporations to outsource jobs.

And for those who worship at the feet of Al Gore, another inconvenient truth is to be found in a recently published paper from the Journal of Atmospheric and Solar-Terrestrial Physics:

The Abstract states:

Daily temperature and pressure series from 55 European meteorological stations covering the 20th century are analyzed. The overall temperature mean displays a sharp minimum near 1940 and a step-like jump near 1987. We evaluate the evolution of disturbances of these series using mean squared inter-annual variations and “lifetimes”. The decadal to secular evolutions of solar activity and temperature disturbances display similar signatures over the 20th century. Because of heterogeneity of the climate system response to solar forcing, regional and seasonal approaches are key to successful identification of these signatures. Most of the solar response is governed by the winter months, as best seen near the Atlantic Ocean. Intensities of disturbances vary by factors in excess of 2, underlining a role for the Sun as a significant forcing factor of European atmospheric variations. We speculate about the possible origin of these solar signatures. The last figure of the paper exemplifies its main results.

The paper concludes:

In concluding, we find increasingly strong evidence of a clear solar signature in a number of climatic indicators in Europe, strengthening the earlier conclusions of a study that included stations from the United States (Le Mouël et al., 2008). With the recent downturn of both solar activity and global temperatures, the debated correlations we suggested in Le Mouël et al. (2005), which appeared to stop in the 1980s, actually might extend to the present. The role of the Sun in global and regional climate change should be re-assessed and reasonable physical mechanisms are in sight.

Shorter conclusion?

“It’s the sun, stupid”.

~McQ


Will Waxman-Markey Inspire A Trade War?

Apparently it will according to some who have actually beaten their way through the entire bill and read the contents:

The Ways and Means Committee’s proposed bill language (pdf) would virtually require that the president impose an import tariff on any country that fails to clamp down on greenhouse gas emissions.

Of course in this full bore onslaught of major life changing legislation which the Democrats seem determined to push through the Congress as quickly as they can (citing the imminent crisis it will foment if they don’t), this issue seems to be lost in the shuffle:

“This is a sleeper issue that lawmakers have not been paying enough attention to,” said Jake Colvin, vice president for global trade issues at the National Foreign Trade Council, which represents multinational corporations like Boeing Co. and Microsoft Corp. advocating for an open international trading system.

“The danger is, you focus so much on leveling the playing field for U.S. firms, that you neglect the potentially serious consequences that this could have on the international trading system,” Colvin said.

Ya think?

Nancy Peolosi is aiming for a vote in the House this Friday, before the July 4th recess. That obviously will mean very, very limited debate, if any. As NRO notes:

Not content to tempt political fate by imposing huge carbon taxes on the American middle class, Democrats have added a provision which imposes stiff tariffs on our trading partners if they don’t adopt aggressive carbon restrictions of their own.

You heard correctly: progressives have authored a bill that earns the mortal enmity of domestic energy consumers and our most crucial trading partners at the same time. Economy-killing climate policies and a trade war — together at last!

The devil is in the details:

Leaks from Hill offices indicate that the president would now be forced to impose the carbon tariffs — and could only opt out of doing so with permission from both chambers of Congress. Carbon-intensive imports would be subject to penalties at the border unless the country of origin requires emission reduction measures at least 80 percent as costly as ours. (The original Waxman-Markey bill had a threshold of 60 percent.)

Brilliant. Of course, some are going to argue that such measures surely will not be in the Senate version and not survive the reconciliation process when the two versions are merged. With this Congress I wouldn’t bet the farm on that.

There’s some talk that the blue dogs are going to oppose this bill. Obviously you would expect the GOP to oppose it as well. Are there enough other Dems to oppose so as to defeat it? Pelosi may not be the sharpest knife in the drawer when it comes to many things, but over the years she has learned to count votes I’m sure.

Bottom line: this bill is an economy killer, plain and simple. But it is also a progressive wet-dream shared by Pelosi. She is going to do everything in her power to push it through the House.

~McQ