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Hi from Washington, Joe Biden was forced this week to address concerns that rising inflation might undermine his $4 trillion spending plan. The President insisted that the Fed will take action when necessary, but reiterated his senior government officials’ belief that current inflationary pressures will ease over time.
Our main content today is decarbonization, and how the United States put forward some ideas of its own to reduce emissions after the EU announced its plan to address climate change. We believe that these attempts on both sides of the Atlantic will have a major impact on the world of trade.
Concession waters Focus on Europe’s attempts to improve its ability to manufacture semiconductor chips.
Washington catches up on CBAM
President Joe Biden talked a lot about environmental issues. But when it comes to carbon pricing and emissions taxes, Washington lags far behind Europe.
At least under the leadership of Donald Trump, not only did the United States not pay as much attention to climate change as Europe, but it was also not as interested in formulating carbon pricing strategies as Europe. Even under the leadership of the Biden administration, Washington is more concerned about investing in clean technology and developing regulations than taxing carbon.
Until now. Last week’s major disclosures of Europe’s new climate policy proposal “Fit for 55”, including its carbon border adjustment mechanism, or CBAM, have not been ignored in Washington. At Trade Secrets, we have been following the headlines of new and brewing transatlantic trade wars related to carbon and climate change. Although the idea that Europe may begin to punish carbon-intensive products imported from the United States will cause dissatisfaction in some respects, it also seems to prompt some Democrats to push for a policy response. Surprisingly, the Democratic Party proposed to us the curve-ball proposal of “pollution import fees” when formulating the latest spending plan.
This sounds interesting, although we haven’t been able to dig out any further details about what such expenses might look like. One thing to note is that the United States currently does not have a carbon pricing mechanism like the European Union. Therefore, keeping the carbon cost of imported products consistent with domestic products (such as CBAM) is not so much an “adjustment” as a direct import tax.There are already some Big question mark Whether the EU proposal can be passed through a litigation battle with the World Trade Organization’s trading partners. David Kleimann of Georgetown University said that any US version that ends up in the form of taxes or fees is unlikely to cooperate with the WTO. Kleimann said: “If you don’t make adjustments, but just levy some kind of arbitrary sewage charges, then the WTO will definitely start to sound the alarm.”
A senior Democratic aide said that there is still a lot of discussion between the White House and Capitol Hill Democrats on the actual situation of the proposal. Ron Wyden, chairman of the Senate’s powerful Finance Committee, said that “a well-designed border adjustment can ensure that foreign competitors pay a fair share without taking responsibility for pollution.” At the same time, Senator Chris Kuhns and Congressman Scott Peters proposed a slightly different idea in a new bill. They called for taxation on imported products from polluting countries, aimed at matching the regulatory costs of domestic companies in the US due to US environmental regulations.
So is it possible that the United States will evade carbon pricing and implement measures different from the EU system? Maybe.in A recent paper, Todd Tucker of the Roosevelt Institute and Timothy Meyer of Vanderbilt believe that the United States does not need to introduce carbon pricing like the EU, but it can still work with allies to agree on how to measure carbon intensity. The agreement also imposes tariffs on carbon-intensive industries. They think the steel industry will be a good starting point. They say that the United States’ recent preference for industrial policy—subsidies to key industries—combined with a strong regulatory system is a legitimate alternative to a carbon pricing system.
There are some suggestions that the movement from the European Union may be adversely affected in Washington and open up new fronts in the transatlantic trade war.People like Russia have Criticize this measureSo far, it seems unlikely that the United States will follow suit-the Biden administration and the United States Trade Representative have stated that they support environmental protection and strong climate policies, and that they have not caused much commotion on Capitol Hill. The question is how Washington responds. Although the details have not yet been determined, it is clear that there has been a new focus and speed.
Today there is a great reading about Europe trying to improve its competition in Europe Semiconductor chip manufacturingOf course, Europe is far from the only region focusing on this (see Trade ties For example, more information about U.S. efforts). However, since the automobile manufacturing industry is one of the industries most severely hit by production shortages during the pandemic, there are reasons to increase production capacity.
The chart below shows that the region is particularly weak in the lack of foundries for manufacturing and assembling chips. Hopefully, a wave of investment will correct this. But as emphasized by Big Read, many people doubt whether it really works. Claire Jones
This Federal Maritime Commission The U.S. has ordered the 9 largest ocean carriers in the world Accept audit Designed to investigate detention and demurrage practices.As a trade secret Report Earlier this week, Joe Biden Hope to curb the soaring transportation costs during the pandemic.Biden’s team is also optimistic (Bloomberg, $) on Chip situation, Said that American automakers should be relieved in the short term.
Nikkei report ($) that North Korea’s food shortage The crisis level of 860,000 tons has been reached. As this isolated country keeps its borders closed to imports, this will become the most serious humanitarian crisis in Asia.