Merkel's Pet Issue

A week ago, the European Union announced that they may decide to levy trade sanctions against the US and China if those two nations continue to refuse international carbon restriction agreements. For example, the EU leaders agreed last year that they will attempt to cut CO2 emissions 20% by 2020. The trade sanctions threat is an interesting one. The EU argues that their corporations will be at a competitive disadvantage internationally, since US and Chinese goods will have been produced using cheaper carbon.(information from source below).

For example, Angela Merkel (see pic below) was quoted as saying, "Industry, faced with global competition could be exposed to a real disadvantage if no international climate accord is struck, but we in Europe have very strict rules." Angela Merkel has made climate change her pet issue and has done a lot of important and interesting work both in Germany (where she is chancellor) and abroad.(1)

France's own President Sarkozy also added, "Our main concern is to set up a mechanism that would allow us to strike against the imports of countries that don't play by the rules of the game on environmental protection."(1)



Unquestionably, the recent economic downturn, lead by the US, has caused worry among EU nations who have committed to decreasing carbon emissions. It is much easier to think about low-carbon production when the economy is strong than when it is in recession. This issue also highlights the problems that environmental efforts face when relying on such strong international cooperation. In my opinion, it might be almost impossible to expect countries to lower their carbon emissions by enough to make a difference - simply because of this interrelationship between carbon relations and market prices. The idea of tariffs is interesting, although the part of me that is strongly free-market balks a bit at the idea of purposefully hindering market functioning.

Do you all think it is moral/smart to use such economic punishments in order to induce international cooperation?


1. Much of the information quoted in this blog is from an article written by the Associated Press and published at:
http://www.boston.com/news/world/articles/2008/03/15/eu_warns_china_us_over_carbon_emissions/