(Incidentally, the July Snowmass presentations regarding Integrated Assessment models of the effects of such emission-reduction policy plans, which I plugged in my preceding blog post, are now accessible to the public.)

But issues of competitiveness and how to address it have risen to the top in the climate change policy debate among politicians.      The Lieberman-Warner bill - would have required the president to determine what countries have taken comparable action to limit GHG emissions;  for imports of covered goods from covered countries, the importer would then have had to buy international reserve allowances – equivalent to a tariff.  (The same with some of the bill’s competitors such as the Bingaman-Specter “Low Carbon Economy Act” of 2007.) 

In theory, there is a possible legitimate role for border adjustments in facilitating a multilateral regime such as the Kyoto Protocol.  One might think of penalties on carbon-intensive imports:

1.      as sanctions to apply pressure on non-participants,

2.      as a calibrated “countervailing duty” to equalize a distortion that will otherwise see carbon-intensive activities migrate to less-regulated countries (a phenomenon known as leakage)   or

3.      as political reassurance to domestic firms worried about their international competitiveness.

If designed properly, they need not necessarily be inconsistent with the WTO (World Trade Organization).    There are precedents, most importantly (and most ironically) the famous/infamous shrimp/turtle case.

But U.S. politicians are unlikely to do it properly.   They may be unaware that the US is more likely to end up as the target of such tariffs than as the enactor – to end up as the defendant, rather than as the prosecutor.   The European Union is way ahead of us in cutting back GHG emissions under the Kyoto protocol, and its EC Directive earlier this year had similar language calling for penalties aimed at shirking competitors.   That’s us.  The difference between their provisions for dealing with shirkers and ours is that their system is already in operation, while for the time being, we are the shirkers.  So US politicians had better look before they leap on this one.

The Brookings Institution had a conference in June that was well-focused on this set of policy issues, organized by Lael Brainard.  Interested readers can link to the papers at Climate Change, Trade and Competitiveness: Is a Collision Inevitable ?    Mine was titled  “Addressing the Leakage/Competitiveness Issue In Climate Change Policy Proposals,” in the panel on Proposals to Deal with Leakages.   

 The issues are reminiscent of larger fears on the part of anti-globalizers — that the WTO and free trade are obstacles to environmental regulation more generally — fears that I think are largely misplaced.   With well-designed multilateral policies, we can work to protect the global environment while simultaneously preserving the economic advantages of free trade.

I am also working on a broader project to address the design of climate change policy architecture as part of the HPICA initiative at Harvard directed by Joe Aldy and Rob Stavins.

[Any readers wishing to comment on this blog post: I suggest you go to the RGE version.] 

Nicholas Kristof’s column in the New York Times today, “Better Roses than Cocaine,” says it all. There is no good reason for the US Congress to continue to hold up the free trade agreement that the Administration has negotiated with Colombia.

Free trade with Colombia can’t have anything to do with loss of US jobs: Colombia’s exports already enter the US duty-free. Rather, the Free Trade Agreement would reduce remaining Colombian barriers to imports from the US. It could contribute (a bit) to a surge in US exports worldwide, which in turn could once again become the engine of US growth that it was in the 1990s.

Nor would free trade with Colombia be bad for human rights in that violent country. No government is perfect. But the Uribe government offers the best hope of bringing some measure of peace, prosperity and justice to Colombia. It is fighting against the guerillas and drugs. It wants to give farmers some security, for example, so that they know they have an assured US export market in cut flowers to replace the risky business of growing coca for cocaine. It deserves our support.

American labor unions raise the issue of killings of Colombian union leaders. But this is a weak reason to oppose the FTA. For one thing, the odds of being killed if you are a union leader in Colombia are now less than the odds of being killed if you are a regular citizen.

It is hard to escape the conclusion that the main reason Congressmen are opposing the Colombian free trade agreement is to pander to ill-informed American public opinon. (Of course the White House would have been better-advised to concentrate its energies and political capital on the multilateral level, the WTO, rather than on the negotiation of myriad bilateral FTAs with small countries. But this is an argument of economists and policy wonks. No politicians are opposing the Colombian agreement on these grounds.)

Kristof concludes with a challenge to Democrats. “Democrats instinctively criticize Bush when he harms America’s standing in the world.” I assume he has in mind Kyoto, Guantanamo, Abu Graib, land mines treaty, International Criminal Court, nuclear weapons policy, energy policy, steel tariffs, and other economic missteps I could list (see The International Economy). He continues, “But a test of intellectual honesty is your willingness to hold your own side to the same standard and to point out pandering in those politicians you normally admire.”

He is right. Hillary and Barack: if you are listening, SUPPORT THE COLOMBIAN FREE TRADE AGREEMENT! Everybody else: read Kristof.