The Obama Administration's trade policies can spur a green jobs revolution -- but proposals moving their way through Congress could stop it in its tracks. "The nation that leads the world in creating a new clean energy economy will be the nation that leads the 21st century global economy," President Obama has said. But establishing that clean energy economy in the U.S. will depend in part on the Administration's success in opening markets overseas and overcoming a new breed of green protectionism at home and abroad.
Although trade policy has been largely overlooked in discussions about climate change, innovative and environmentally conscious leadership from the U.S. is essential to increase the number of green jobs.
While the U.S. market for green goods and services is the largest in the world, growth has slowed in recent years. Future growth of the U.S. industry will depend on foreign markets, which are expanding rapidly and offer tremendous potential for American exporters. Currently U.S. companies face disproportionately high tariffs and other obstacles on exports of environmental goods and services like wind turbines and solar panels, particularly in fast-growing developing countries such as China and India. Reducing these impediments would allow U.S. companies to capture a larger share of the nearly $700 billion global market in environmental goods and services, which is growing at twice the rate of all merchandise trade.
Reducing barriers on green goods and services can also help the environment. The widely cited Stern Review on the Economics of Climate Change prepared for the British government highlights "a clear case for lowering tariffs" on green goods, and argues that "Increased trade allows effective and efficient mitigation or adaptation to climate change." Research also suggests a link between more green trade and improved environmental quality.
Yet despite the potential benefits to the economy and the environment, international discussions over how to encourage more trade in green goods and services have been relegated largely to one institution -- the Geneva-based World Trade Organization. Virtually no mention is made of the economic or environmental importance of green trade in global climate change talks under way at the U.N.
A new strain of green protectionism
In the U.S., the American Clean Energy & Security Act, which passed the House in June, is also silent on the importance of green trade to the U.S. economy. In fact, the legislation would establish a framework for the U.S. to impose what amounts to new carbon tariffs on some foreign goods, which in turn could make it more difficult for U.S. manufacturers to export green products to key markets.
Equally worrisome are actions by U.S. trading partners that suggest a new strain of green protectionism. Brazil recently raised its tariff on certain wind turbines from zero to 14% in advance of a major auction for wind farms that will take place this fall. China is increasingly sheltering its markets from international competition and giving preference to domestic producers for local green contracts even as it exports much of its clean energy manufactures, like solar energy panels, to the U.S.
President Obama has an opportunity to stem this protectionist tide and promote green trade by vigorously supporting the conclusion of an international agreement to lower barriers to environmental goods and services. In 2007, the U.S., along with the EU, proposed eliminating trade barriers in the context of ongoing trade negotiations at the WTO. While the Obama Administration has expressed support for such an agreement, the time is right to elevate the importance of green trade at home and abroad.
One good place to start would be Pittsburgh, where the members of G-20 nations will meet in September, chosen in part because of the city's commitment to green technologies. U.S. diplomats should also seek to ensure that the global climate agreement scheduled to be concluded in Copenhagen this December reflects the importance of eliminating green trade barriers to achieving environmental goals.
The President should work with Congress to include support for removing green trade barriers in domestic legislation, which the Senate is scheduled to consider in September. Emphasizing the importance of an environmental goods and services agreement in climate legislation would complement congressional efforts to spur U.S. green jobs and deliver clean technologies to the developing world.
A bipartisan green trade policy
There are potential political benefits to supporting green trade, too. By positioning himself as a "green trader" abroad, President Obama would help to establish his trade credentials with U.S. trading partners. Such an effort could help to deflect criticism from U.S. allies about low-level protectionism that has crept into U.S. legislation in recent months.
President Obama also has a unique opportunity to bring together traditional supporters of trade in Congress with proponents of clean energy legislation who recognize that the number of jobs created in the United States will depend in part on how many products and services U.S. companies can sell abroad. After suffering through nearly a decade of bruising partisan division, the U.S. trade agenda would benefit from an issue such as promoting green trade, which could attract support from Democrats and Republicans.
The road to U.S. recovery may be green, but it is up to U.S. trade policy to help pave the way.
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