Text of Association Letter on Climate Change

Tuesday, 29 April 2008

April 29, 2008

The Honorable John Dingell


Committee on Energy and Commerce
U.S.House of Representatives

2125 RayburnHouse OfficeBuilding

Washington,DC 20515

Dear Chairman Dingell:

The undersigned associations,which have an economic interest in nearly every country, share a common desireto find a global solution to climate change.  At the same time, we areconcerned about the potentially adverse impact that some mechanisms could haveon global trade, jobs and the competitiveness of U.S. industries. 

Your committee’s recent WhitePaper raised several important questions about various approaches to climatechange.  As you develop legislation, werequest your consideration of the following comments we have with regard totrade, competitiveness and World Trade Organization (WTO) matters.

Because the United States is not alone in seeking to moveforward on climate change reductions, U.S. actions will inevitably beclosely monitored and could be used against us in an asymmetric manner or as ajustification for other countries’ unilateral and potentially harmful responses. For example:

  • If the United States were to impose emissions legislation that levied tariffs against certain goods from another country based on environmentally-unfriendly production practices, that country could respond by taxing all goods made in the United States by pointing to U.S. per capita CO2 emissions, which are dramatically higher than the world average.  
  • Other countries may be more blatant, and adopt similar practices for the purpose of excluding U.S. goods and services from their markets.

It is also possible thatcountries will seek to retaliate outside of the WTO context, for example, bycreating unrelated regulatory barriers to imports, changing purchasing patternsor canceling contracts. 

As the committee noted in itsrecent White Paper, any unilateral action the United States takes with respectto climate change also raises issues of compliance with our WTO commitments andwill likely result in challenges under the rules of that body.  Because prior WTO cases are not binding andare unreliable predictors of future action, it is impossible to guess with any certaintythe result of such a challenge.  To theextent that U.S.climate change proposals do not adhere to basic WTO principles such as most–favored-nationand national treatment, they run the risk of being found to be inconsistentwith our obligations and subject to permissible trade retaliation by othercountries.

Unilateral and discriminatoryaction by other countries or retaliation against U.S.exports for U.S. actions wouldimpose substantial costs on American businesses and workers, and undermine theinternational economic opportunities that are vital to promote greater growthin the U.S.economy.  Such actions would also make itmore difficult to reach consensus on a multilateral approach to climate change.

We believe that the best way to achieve those objectivesis to pursue multilateral negotiations that would shape a post-Kyoto approachto global climate change policy.  

The UnitedStates has a clear interest in taking thelead in such a negotiation in order to compel the participation of othercountries and shape a set of acceptable rules that are not used unfairly torestrict international trade.  Absent anagreement, any unilateral approach by the United States is likely to bechallenged internationally.

It is also essential that anyapproach to climate change conform to basic WTO principles.   Legislation must not, therefore, discriminatebetween various countries or between domestic and foreign producers, and shouldseek to minimize trade-distortions. Adoption of overly-strict production process standards raises seriousissues of WTO conformity and could be intended to create unfair restrictions onimports rather than to protect the environment. It is also vital to allow sufficient time to negotiate a multilateralframework before implementing rules.

Finally, trade liberalization canbe an important factor in addressing climate change. Reducing trade barriersfor clean technologies and enhancing access to those technologies should be animportant part of any broader multilateral effort to combat global warming.

Last year, the United States announcedits support for a global Environmental Goods and Services Agreement (EGSA) inthe context of the ongoing Doha Round of trade negotiations under the WTO.  Such an agreement has considerable potentialto attract the support of our members, and to create new political alliances supportiveof environmentally-friendly trade, which could, if necessary, be pursued on an acceleratedbasis independent of the final completion of the Doha Round.

We encourage you to work withyour colleagues on the Ways and Means Committee to explore the internationaltrade and competitiveness implications of any climate change proposal that isdeveloped by your Committee.

Thank you for your considerationof our views. We look forward to working with you and the Members of theCommittee as you explore legislation to deal with this important issue.


American Apparel & Footwear Association

American Farm Bureau Federation

National Foreign Trade Council

National Retail Federation

Retail Industry Leaders Association (RILA)

Travel Goods Association (TGA)

U.S.Council for International Business (USCIB)

UnitedStates Association of Importers of Textilesand Apparel (USA-ITA)