In case you missed it, speaking before the American Chamber of Commerce in Shanghai earlier this month, Commerce Secretary Gary Locke, according to Reuters, said:
It’s important that those who consume the products being made all around the world to the benefit of America — and it’s our own consumption activity that’s causing the emission of greenhouse gases, then quite frankly Americans need to pay for that.
Reuters went on to report:
Though U.S. President Barack Obama has expressed concern about the House "carbon tariffs", Locke said it was an open question whether he opposed them or not. "The president has not taken a position on any particular element of the legislation," Locke said. "It's simply premature to talk about individual pieces of the legislation without seeing it in its totality," Locke said, noting the Senate still has to pass its version of the bill.
Wait a minute, shouldn’t the Commerce Secretary be a strong voice for free trade, and reduced costs on businesses and consumers? And why is the Obama administration, once again, wavering on trade?
A few days later, Locke seemed to back off. Reuters again reported:
As the United States and other developed countries make costly commitments to address climate change, "developing countries like China must do the same," Locke told members of the Manufacturing Council, a private sector advisory group.
"They've got to step up. They've got to pay for the cost of complying with global climate change. They've got to invest in energy efficiency and conservation, but also very definitive steps in reducing greenhouse gas emissions," Locke said.
Of course, the irony that Locke and others miss is that U.S. consumers would pay either way. Mandated emissions reductions, at home and elsewhere, would jack up energy costs and prices paid by consumers, and/or tariffs would raise prices and trigger a trade war. There are no good options here.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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