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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Global trade gets a bad rap. But we can’t stop climate change without it.

By Eduardo Porter Washington Post

Here’s a suggestion for American fashionistas eager to do what they can to prevent climate change: Contra the ads, don’t buy American. For each dollar’s worth of clothing it manufactures, the U.S. textile industry emits nearly three times as much carbon dioxide as its Chinese counterpart. Stick to sourcing your wardrobe from China.

According to research from the Kühne Center at the University of Zurich, iron smelters might want to buy their coke from Argentina rather than Australia, where carbon dioxide emissions from coke production are almost three times greater. Climate-conscious furniture makers might do better to transfer their lumber purchases to Finland, where wood production emits about one-thirtieth the carbon, per dollar produced, of wood from Indonesia.

And environmentalists en route to the U.N. climate summit in Dubai, pushing the notion that globalization and the architecture of world trade are deleterious to the planet, might want to consider how difficult it would be to make any of these choices in the absence of robust global trade.

Trade gets a bad rap from green types. There is the evergreen critique about how the rules of globalization allow multinationals to do a variety of bad things to workers, communities and ecosystems in pursuit of profit. Climate change adds the charge that trade allows the Global North to offload carbon emissions by moving its most heavily emitting industries to the Global South.

Trade does come with environmental burdens. And yet the enviro-critique is not just a little wrong.

It ignores everything we have learned about trade since at least the 19th century, when British economist David Ricardo explained how the world could be made better off if countries specialized in industries where they have a comparative advantage and imported other things from relatively more efficient producers elsewhere.

So-called carbon leakage does move some emissions from rich countries to poor ones. Shippers do burn fossil fuels. But these effects are swamped by the emissions reductions enabled by trade. For starters, countries made richer by trade demand less-polluting products and invest more in producing clean stuff. In the Global South, exporters invest more in pollution control than do producers for the local market.

Most importantly, trade, in the climate change era, allows economies with relatively clean sources of energy to specialize in energy-intensive goods and services. It is essential both to shift the footprint of global production to where things can be made at the least cost to the environment and to allow the dirtier producers in the developing world to acquire technologies – mostly originated in richer nations – that will enable them to reduce their emissions, too.

Think about food. Brazil is a big global supplier of soybeans and beef. But its agricultural production is carbon dioxide-intensive. Notably, it requires cutting down a lot of rainforest. Decarbonizing the food supply requires both shifting demand away from Brazil toward low-carbon suppliers and shrinking the carbon footprint of Brazil’s agribusiness by encouraging the adoption of more carbon-efficient technologies.

Rewarding though it might seem to trash the tools of the globalized, neoliberal economic order, it is unlikely that climate change will be stopped without them.

The report from Switzerland’s Kühne Center calculates the effect of a tax on carbon dioxide emissions, which – to the chagrin of neoliberalism’s opponents – remains the most powerful tool known to economists for setting the world on a path toward a carbon-free future: Like taxes on, say, tobacco, it discourages consumers from buying carbon-heavy stuff. It also encourages producers to be as clean as possible, to avoid the penalty.

A global, uniform $100-per-ton tax on carbon dioxide emissions would drive them down by 27.5%, at a relatively modest economic cost of 2.6% of global gross domestic product, according to the Swiss researchers.

Just under 10% of this would come from a decline in consumption as the tax pushed up average prices and costs, slowing the world economy a bit. Some 55% of the gains would come from consumers moving away from more-polluting products and services toward those with a smaller greenhouse gas footprint.

And more than 35% would come via the shift of worldwide production as, for instance, consumers switched from Brazilian beef to eating more from Argentina.

This is not controversial.

Researchers in Germany and Switzerland offered a different way to look at the same thing. They built scenarios, including one in which different regions established a price on carbon dioxide that would lead them independently to meet their pledged emissions targets for 2030, as well as a more cooperative framework with a common global carbon dioxide price and inter-regional trade. Cooperation would reduce the total cost of meeting the carbon dioxide target by 60%.

None of these adjustments will be easy. Shifting the economy to low-carbon suppliers cannot work as a stand-alone. It mechanically moves global production to the rich world, hurting developing economies. Mechanisms are needed for poorer countries to acquire the technology to reduce their greenhouse gas emissions. These require robust exports to the Global North, so the Global South can afford to buy the rich world’s tech.

Each step is politically complicated. Washington’s deployment of incentives to bring manufacturing “home,” for instance, suggests it will not be comfortable with a world in which it has outsourced a lot of jobs to India, Bangladesh or Nigeria so those countries can afford the solar panels and low-emission air conditioners they will need to build a low-carbon future.

Putting a price tag on carbon emissions? Fuhgeddaboudit! That approach faces opposition from both the oil lobby and the pope.

One message that must cut through ideologies, hostilities and special interests: Without trade, lots of trade, dealing with climate change will remain beyond our reach.