Climate change trade wars

Activists dressed as world leaders protest against the rising water levels during a demonstration on the Forth and Clyde Canal as the UN Climate Change Conference (COP26) takes place, in Glasgow, Scotland, Britain, November 9, 2021.

The COP26 climate summit in Glasgow is almost done and dusted, with some ambitious commitments and breakthroughs from governments and corporations to more aggressively tackle the climate disaster. Yet, though there seems to be broad agreement on what needs to be done to stop the planet getting hotter — like getting to Net Zero emissions over the next few decades — big disagreements remain on how to pull it off.

As countries try to turn jobs green while also boosting exports to keep foreign cash flowing in, reliance on protectionist economic policies is becoming an increasing point of friction between governments. Here are two juicy examples where this dynamic is playing out.

The US rumbles with Mexico and Canada over cars. The Biden administration has united Mexico and Canada in rage over its proposal to roll out financial incentives for Americans to buy US-made electric vehicles, with additional tax credits for buying a car with a US-made battery or made at a unionized factory. Some American political nerds weren't surprised at all given Biden's longtime bonafides as a pro-union warrior.

Ottawa, however, was shocked and is now furious, calling it a protectionist move that'll encourage automakers to build electric vehicle factories in the US rather than Canada. That's a massive deal because the auto industry is one of Canada's largest manufacturing sectors, contributing more than $12.5 billion to its GDP in 2020. Mexico, for its part, is also riled up, saying that the US proposal undermines its plans to transition its equally crucial auto industry to electric models, which is central to Mexico's overall climate change mitigation strategy.

Mexico City and Ottawa have accused Washington of violating the USMCA — a NAFTA replacement that was painstaking to negotiate — which was supposed to guarantee a level playing field for the three countries. Canada and Mexico could now bring a case forward under the pact's dispute mechanisms.

The most exclusive club in Europe: carbon. The European Union, which has made some of the most ambitious climate pledges in the world to date, has proposed a carbon tax on specific imports entering the bloc, including steel, fertilizer, oil and cement. Essentially, Brussels wants to impose carbon tariffs so that foreign producers will be subject to the same financial burdens as European manufacturers when making similar products.

Indeed, by putting a price on carbon emissions — and forcing EU-reliant economies to pay up or lose big business — the European Commission has figured out a way to pay, at least in part, for its very expensive Green Deal.

What's more, some countries are up in arms that Brussels has been pushing for wealthy, like-minded countries to join its carbon pricing scheme in exchange for access to the EU's single market, excluding tariffs and quotas already in place for other goods. (Canada is now looking into its own scheme). Critics say that setting up a "trans-Atlantic climate club" – whereby all states would either impose a border carbon tax or an equivalent emission trading system – is discriminatory: Australia's coal-loving Prime Minister Scott Morrison, for example, said the push is "simply trade protectionism by another name." Meanwhile, Brazil, South Africa, China and India have also complained that a far-reaching carbon border tax would be a "trade barrier," unfairly penalizing developing nations who are still reliant on fossil fuels to grow their economies.

While the EU has pulled back a bit in recent months — giving countries five years to get their climate priorities in check — the US has not ruled out imposing tit-for-tat tariffs if Brussels slaps carbon levies on US goods. Meanwhile, countries like China, Russia and Turkey — which stand to lose a lot from an EU carbon tax — have accused Brussels of violating international trade principles.

What now? Some climate policy advocates are worried that using coercive tools like tariffs and tax credits could backfire, giving ammunition to the naysayers who believe that climate policy makes for bad economics.

In the end, will global efforts to protect the planet run aground on national efforts to protect certain industries?

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As the private sector innovates aid and financing, seeking holistic solutions to neighborhood challenges is the cornerstone of the approach.

Businesses, which rely on healthy communities for their own prosperity, must play a big part in driving solutions.

See why.

Australian Open - First Round - Melbourne Park, Melbourne, Australia - January 21, 2020 China's Peng Shuai in action during the match against Japan's Nao Hibino

The Women’s Tennis Association this week decided to suspend all tournaments in China, over doubts that the country’s star player Peng Shuai is safe and sound. Peng recently disappeared for three weeks after accusing a former Vice Premier of sexual assault. Although she has since resurfaced, telling the International Olympic Committee that she’s fine and just wants a little privacy, there are still concerns that Peng has been subjected to intimidation by the Chinese state.

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Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective from Europe:

How is Europe dealing with new omicron version of the pandemic?

Well, I mean the big issue isn't really that one, the big issue if you see the havoc that is created in several European countries at the moment is the delta. The delta is making impressive strides, particularly in countries that have a slightly lower vaccination rates. So that's the number one fight at the moment. And then we must of course prepare for the omicron as well.

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Caravan of Taliban soldiers with guns held upright

Listen: With the US gone and the Taliban back in control, Afghanistan faces a long winter. Mounting food insecurity and a crumbling economy have left many Afghans feeling abandoned. The international community could help solve this humanitarian crisis, but can they trust the Taliban?

Ian Bremmer sat down with journalist and author Ahmed Rashid to learn more about the Taliban today. Few people know more about the Taliban than Rashid, who wrote the book on the group — literally. In the months after 9/11, his critically acclaimed 2000 study Taliban became a go-to reference as the US geared up to invade Afghanistan and knock the militant group from power. Twenty years later, how much has the group changed since the days of soccer-stadium executions, television bans, and blowing up world heritage sites?

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Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:

What are the DSA and the DMA?

Well, the twin legislative initiatives of the Digital Services Act and the Digital Markets Act are the European Union's answer to the challenges of content moderation online and that of the significant role of major market players, also known as gatekeepers in the digital markets. And the intention is to foster both more competition and responsible behavior by tech companies. So the new rules would apply broadly to search engines, social media platforms, but also retail platforms and app stores.

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Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:

What is happening to Roe v. Wade?

Well, this week, the Supreme Court heard arguments in a case called Dobbs v. Jackson, which challenges a Mississippi law that would outlaw abortions after 15 weeks in the state. That law itself is a direct challenge to the legal precedent set by Roe v. Wade nearly 50 years ago, which is one of the most politically important Supreme Court decisions in American history. It has driven deep polarization between the right and the left in the US and become a critical litmus test. There are very few, if any, pro-life Democrats at the national level and virtually no pro-choice Republicans at any level of government. Overturning Roe has been an animating force on the political right in the US for a generation. And in turn, Democrats have responded by making protecting Roe one of their key political missions.

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What We're Watching: Angela Merkel's punk rock farewell, Iran nuclear talks resume

Angela Merkel's punk rock farewell. Although she doesn't officially step down as German Chancellor until next week, Angela Merkel's sendoff took place on Thursday night in Berlin, with the traditional Grosser Zapfenstreich — a musical aufweidersehen, replete with torches and a military band. By custom, the honoree gets to choose three songs for the band to play. Among Merkel's otherwise staid choices was a total curveball: You Forgot the Colour Film, a 1974 rock hit by fellow East German Nina Hagen, a renowned punk rocker. The song, a parody bit about a man who takes the singer on vacation but has only black-and-white film in his camera, was understood as a dig at the drabness of life in the East. We're listening to the tune, and... digging it, kind of — but we still prefer Merkel's own Kraftwerk-inspired farewell song from Puppet Regime. Eins, zwei, drei, it's time to say goodbye...

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World leaders at the G20 Summit in Rome, October 2021

This week, the World Health Organization’s governing body agreed to begin multinational negotiations on an agreement that would boost global preparedness to deal with future pandemics. The WHO hopes that its 194 member countries will sign a treaty that helps ensure that the global response to the next pandemic is better coordinated and fairer.

The specifics remain to be negotiated over the coming months – and maybe longer – but the stated goal of those who back this plan is a treaty that will commit member countries to share information, virus samples, and new technologies, and to ensure that poorer countries have much better access than they do now to vaccines and related technologies.

Crucially, backers of the treaty insist it must be “legally binding.”

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