Climate and Trade Task Force Created

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Apr. 22, 2024
By: Chaney A. Finn

One reality of manufacturing in the United States is that environmental regulations are costly for companies bearing them. While this has translated into U.S. goods simply being more expensive in the past, there has been a growing awareness in government that global climate goals are undermined by allowing countries to produce cheaper goods by simply not having environmental regulations. The implementation of this awareness is part of the impetus for discussions of carbon taxes on imports.

While carbon taxes are not yet implemented, the White House did announce on April 16 the establishment of the Climate & Trade Task Force. The new task force is expected to focus on three areas: developing the U.S. climate and trade policy toolkit; ensuring smart climate and trade policies being implemented; and domestic environmental improvement identification to further reduce emissions. Members of the task force were not specified, however USTR Katherine Tai has been named as one member.

The announcement indicated that the task force will approach developing a climate and trade policy toolkit “with an open mind” regarding the approaches used to address “carbon leakage, carbon dumping, and embodied carbon in general.” John Podesta, who delivered the announcement at the Columbia Global Energy Summit, mentioned that an example would be the consideration of the outcomes of the ongoing Global Arrangement on Steel and Aluminum negotiations currently being conducted by Ambassador Tai. He also said the task force would be open to other proposals from industry, lawmakers on Capitol Hill, as well as other interested individuals and organizations. This is intended to open deeper dialogue with trading partners and allies around the world and work in conjunction with similar environmental goals such as the EU’s pursuit of its Carbon Border Adjustment Mechanism.

Ensuring the implementation of smart climate and trade policies speaks for itself for the most part. However, this includes working with trade partners and other trade agencies to standardize emission metrics to create uniform measurement and reporting. This is expected to result in allowing countries and trading partners to utilize “comparative advantages in clean manufacturing.”

The task force will also be responsible for identifying improvement opportunities in domestic manufacturing. The announcement specified $6 billion in grants from the Inflation Reduction Act and the Bipartisan Infrastructure Law to reduce emissions and allow manufactures to be the cleanest and most competitive in the world. This will facilitate and boost other domestic purchasing initiatives such as ‘Made in America’ and the Federal Governments’ Buy Clean Initiative.

The creation of the Climate & Trade Task Force continues the trend that has also produced the carbon tax discussions. Essentially, the administration is attempting to create a “race to the top” in which responsible environmental practices are rewarded instead of production with no checks albeit a less-expensive product, or a “race to the bottom.”

Should you have questions regarding trade emissions or any other trade-related questions, do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP.