A top White House adviser confirmed today that President Obama is open to helping energy-intensive industries cope with the costs of climate legislation, including use of controversial border tariffs he had previously warned could spark a global trade war.
Energy and climate adviser Carol Browner said the administration recognizes Congress' interest in using trade language as it works on climate legislation that addresses concerns from some of the country's industries that are most vulnerable to cheap foreign imports, including steel, cement, glass, pulp and paper.
"There's going to have to be mechanisms that recognize they compete in a global market," Browner said during an event hosted by National Journal. "I think it's fair to say a final bill will be very mindful of the needs of these particular sectors of the economy."
Obama prompted an outcry from moderate Senate Democrats last summer after he questioned a section of the House-passed climate bill H.R. 2454 that punishes developing countries with trade sanctions if they don't do enough to curb their greenhouse gas emissions (E&ENews PM, July 7, 2009).
"At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there," the president told reporters the day after the House's 218-212 vote.
The Senate climate bill's lead authors have sent signals that they will address the concerns of senators from states with trade-sensitive industries, though details on what John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) will say in their legislation remains unclear. The trio are planning to release their bill Monday.
Ten Senate Democrats, led by Sherrod Brown of Ohio and Debbie Stabenow of Michigan, called last week for a border adjustment that is automatically slapped on imports from countries that do not have greenhouse gas requirements comparable to the U.S. law (E&ENews PM, April 15).
"A border adjustment measure is critical to ensuring that climate change legislation will be trade neutral and environmentally effective," the senators wrote to Kerry, Graham and Lieberman.
But Graham said last week he didn't agree with an automatic trigger for trade sanctions. Instead, he said he supported a provision setting a roughly four-year deadline for conclusion of an international climate agreement; otherwise, Congress would need to revisit the issue.
"We don't need to create a trade war," Graham said. "We need to be WTO-compliant. But let me just say this, on behalf of manufacturing, if we don't have an international agreement covering these countries that can put us at a competitive disadvantage, then we'll have to revisit this thing. My approach has always been that you start off with business-friendly language when it comes to border adjustments that's clearly WTO-compliant, but you'd have a provision in there: If not an international agreement by a certain point in time, Congress has to revisit this."
Senate Finance Committee Chairman Max Baucus (D-Mont.) has also indicated he will weigh in on the trade issue as part of a broader plan spelled out by Majority Leader Harry Reid (D-Nev.) before any climate bill comes to the floor.
Overall, Browner said she sees a clear path for the Senate moving a climate and energy bill following talks she has held with lawmakers and key industry and environmental constituents -- meetings that continue later today at the White House with Obama senior adviser Valerie Jarrett and U.S. Chamber of Commerce President Tom Donohue.
"This is, I think, doable," she said. "It's doable because people increasingly believe we're losing out ... in the global clean energy revolution. We were at the forefront of this. We're the people who figured out solar technology. ... We don't want to lose. And I see more and more members understanding this."
Browner said the Obama administration brings "some important principles" to the Senate climate debate but won't release any formal legislative text. Its demands include an economywide system that prices greenhouse gases, with transition assistance to help different economic sectors come into compliance. She also said Obama is open to a flexible approach akin to what's developing from Kerry, Graham and Lieberman, where power plants get treated differently from major industrial plants and petroleum refiners.
"We're very flexible," she said. "If they want to use different tools for one sector or another, then that's fine."
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