Sunday, December 09, 2007

Green Protectionism

For many people there has become a growing concern about global warming and what we can do to help limit its effects. A new bill (that is fairly well supported by both democrats and republicans in congress) would be a big step toward unified efforts among states domestically. The primary concern regarding the bill is that it would be very wide reaching, and could possibly have some strong positive effects for protectionists.

While Al Gore has been strutting his stuff on stage, behind the scenes America’s quieter greens have been successfully lobbying powerful interests. Many companies have come round to the view that they would do better with a single federal system than a patchwork of state-level rules. Farmers have bought the idea that they can make money out of biofuels. Christians have been persuaded that they need to be better stewards of the earth…But two powerful groups have remained determinedly skeptical: energy-intensive manufacturers and organized labor, who fear the effects of higher energy costs in America and their impact on jobs.

Those people who are in the manufacturing sector have legitimate concerns that need to be addressed before the bill is passed. Some have suggested that imports from the manufacturing sector, and possibly others, would need to be certified as to their carbon content and then be charged a tax according to their content. Some are apprehensive about implementing a tax because it will hurt trade overall. Places like China and India will then have a significant barrier to bypass in order to compete on the international market in trading. Another legitimate concern is that once a tax like that is placed on goods there is almost no going back. It would then enable protectionists to fight their personal battles with government support.

“The people who worry the most about the costs of trying to constrain carbon emissions are the very ones demanding protectionist measures. But if those measures are passed, America risks something far costlier than a switch to cleaner energy: a global trade war.” The concerns surrounding the legislation and the bill are very real. Depending on if and how the bill goes into effect, and what the ramifications associated with it are, trade in the United States and world wide could be impacted significantly. Is a bill like this one even necessary? Many people would agree that it is not. The market functions well as it is right now, and to throw one more thing into the mix may begin to muddy the waters with trading partners worldwide.


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