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Demand for tariffs in global-warming legislation splits allies

Midwestern Democrats, who want duties placed on countries who don't limit greenhouse gas emissions, are at odds with Obama.

August 22, 2009|Jim Tankersley

PERRYSBURG, OHIO — A group of Midwestern Democrats is pushing for tariffs on products from countries that don't limit greenhouse gas emissions, a controversial step that the legislators say is needed to help American manufacturers survive expected emissions restrictions here.

The Democrats say the measure would level the playing field for U.S. factories, which will probably face increased energy costs due to global warming legislation backed by the Obama administration. The legislation narrowly passed in the House in June and is pending in the Senate.

The tariff demand has placed a group of often-reliable allies for President Obama -- including Sens. Sherrod Brown of Ohio, Russell D. Feingold of Wisconsin and the newly installed Al Franken of Minnesota -- squarely at odds with the president, who has said that he doesn't want to send "protectionist" signals with the climate change bill.

But Brown said shortly before convening a climate summit earlier this month in Perrysburg that the tariff provision "has to be in" to win the votes of factory-state senators.

It's "about jobs, and it's an opportunity to fix some of our problems in manufacturing, and one of those is the way we've conducted trade in this country," Brown said.

The centerpiece of the climate bill is a system, known as cap-and-trade, which sets gradually declining caps on emissions of heat-trapping greenhouse gases.

Major industries, such as power plants and factories, would need permits for their emissions, which they could buy and sell on an open market.

That basic concept is supported by the bulk of congressional Democrats, along with some Republicans.

The conflict comes in the fine print -- particularly in efforts to protect state and regional economies from the effects of higher energy prices due to the cost of reducing emissions.

As the tariff debate illustrates, one senator's idea of protection can often be another's idea of harm.

A potential tax on imports from countries that do not adopt emissions restrictions would help U.S. factories that have shed jobs in recent decades in the face of low-wage competition, Brown and fellow factory-state Democrats say.

The move would protect existing factory jobs, the senators say, and stop companies from outsourcing production to nations without emissions limits, such as China and India.

Brown added that a climate change bill with a tariff provision offers the best opportunity in decades to reinvigorate Ohio's slumping manufacturing sector and overhaul U.S. trade policies.

Unions and environmental groups in the Midwest have supported the idea and launched a media blitz Wednesday across the industrial Midwest to tout the economic potential of the climate bill.

If done right -- with strong trade protections -- the bill would be "the most important piece of job-creating legislation in 20 years," said David Foster, executive director of the Blue Green Alliance, one of the groups sponsoring the Midwest media campaign.

Factory-state senators say the tariff could help them level the scales with foreign competitors as the states try to shift their industries toward high-tech products, such as wind turbines, solar panels and other alternative energy sources, said Sen. Bob Casey (D-Pa.).

"These clean-technology jobs I don't believe are just some future goal or something in the distance. We're creating them now," he said.

But a tariff upsets some Senate Republicans who have supported past global warming legislation.

"It's absurd for Democrats to think they're going to slap a trade tariff on China, when China is buying all our Treasury debt to keep our economy alive right now," said Mark Helmke, a senior advisor to Indiana Sen. Richard G. Lugar.

Opponents of the tariff say U.S. manufacturing would suffer under the climate bill regardless of trade policy changes.

A recent study by the American Council for Capital Formation and the National Assn. of Manufacturers, which both oppose the bill, warns that the nation could lose as many as 750,000 factory jobs by 2030 if the bill passes.

If climate tariffs are imposed, U.S. trading partners would probably respond in kind, offsetting any benefits that manufacturing would achieve from them, said Margo Thorning, chief economist for ACCF.

Some Democrats worry that tariffs could undermine efforts to win Chinese and Indian support for an international climate treaty set to be negotiated in Copenhagen in December.

"I don't think it is really possible to threaten and intimidate these two countries to a long-term commitment to reduce emissions," said Ed Gresser, trade analyst for the centrist Democratic Leadership Council, which favors free trade.

Obama said in a June interview that he opposed a tariff provision included in the House climate bill that is similar to the provision that Brown is promoting in the Senate.

The House approved the bill by a vote of 219 to 212, cast largely along party lines, with 44 Democrats defecting but eight Republicans helping it narrowly pass.

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jtankersley@latimes.com

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