Business and Labor Groups Fear Climate Bill Could Be Jobs Killer

Industry Week

Senator Sherrod Brown calls for tariffs on imports from countries that don't meet U.S. standards.

More than 4 million jobs could be at risk if U.S. climate-change legislation does not include a tariff on goods imported from countries that don't adopt similar emissions standards, according to a report released Oct. 1 by the left-leaning Economic Policy Institute.

EPI issued the report a day after Sens. John Kerry (D-Mass.) and Barbara Boxer (D-Calif.) introduced their climate bill in the Senate. Unlike the Waxman-Markey bill that the House passed in the spring, the Senate version does not include a "border adjustment" provision that would impose duties on goods imported from countries that haven't adopted emissions-reduction standards for production.

Democratic Senator Sherrod Brown of Ohio has led an effort to include such language in the bill. Brown contends that manufacturers could shift more jobs overseas to countries with less-stringent environmental standards if the legislation does not include a tariff.

"The great risk of a weak climate-change bill is we lose jobs and climate-change emissions increase as a company moves from Findlay, Ohio, to Wuhan, China, where we follow much stronger environmental rules than they do," Brown said in a conference call with labor and environmental leaders on Oct. 1. "So border adjustments are a major part of this strategy. They should be levied against products imported from countries without a comparable climate-change policy."

China produces double the amount of carbon per ton of steel than U.S. manufacturers, according to the American Iron and Steel Institute.  AISI called the Boxer-Kerry bill "a major step backwards from the House version."

"The bill will establish an allowance rebate program similar to that in the House bill, but it does not provide the specificity needed to ensure that the program will be adequate to address the full impact of the bill on energy-intensive, trade-exposed industries," said Thomas Gibson, president and CEO of AISI, in a prepared statement.... "If we don't get climate legislation right, we'll harm the U.S. economy, outsource our manufacturing to China and see global emissions increase -- the exact opposite of the goals of climate policy."

Brown said he met with Kerry several weeks ago and discussed a border protection provision and that Kerry understands the "rightness of the policy for American interests and the politics of it, as does Senator Boxer."

The ultimate goal of an import tax in the climate-bill language is to encourage other countries to enact similar emissions standards rather than penalize them, Brown says.

"I don't have an ultimate interest in having a border equalization. What I do have an interest in is a level playing field. If our enacting border equalization language gets the other major countries to the table to pass similar kinds of climate-change legislation, then there's no need for border adjustment," Brown says.

Brown, along with 9 other senators, sent a letter on Aug. 8 to President Obama calling for a border-adjustment mechanism in the bill. Obama said he opposed language in the House bill that would impose a tariff by 2020 on imports from countries that don't meet U.S. emissions standards.

The U.S. Chamber of Commerce has also criticized carbon tariff provision in Waxman-Markey, calling it "a move that would almost certainly spur retaliation from global trading partners." The National Association of Manufacturers opposed the House bill and cited an analysis that showed the legislation would result in up to 2.4 million lost jobs, higher energy prices for businesses and consumers and cumulative GDP losses of up to $3.1 trillion dollars over an 18-year period.

NAM issued a statement on Sept. 30 criticizing the Senate version for raising the emissions reduction target by 2020 to 20% after the House approved a 17% reduction.

"The increase represents an even more significant technological and economic challenge to manufacturers while resulting in little benefit to the environment," NAM said in a statement.