Tag Archives: kyoto

Are the BRICS ready to lead?

BRICS graphic from the FT

Reflect­ing on the greater influ­ence of the BRICS, recent­ly, in glob­al forums, the always-inter­est­ing Alan Beat­tie asks:

Is this a piv­ot point such as the sec­ond world war, where the con­fi­dent, inno­v­a­tive US mus­cled aside the weak­ened, debt-laden economies of Europe and remade the glob­al finan­cial archi­tec­ture? ” Extract from FT.com

His guess? “No, not yet”. He points out the BRICS are dom­i­nat­ed by one coun­try, Chi­na, that is still depen­dent on for­eign demand for its eco­nom­ic strength rather than on its domes­tic resources.

A decade of rapid growth is not enough for the Brics to seize the baton of glob­al eco­nom­ic lead­er­ship from the US and west­ern Europe. The group­ing, or some of them, may have aston­ished the world with their progress over the past 10 years. But it will require a qual­i­ta­tive improve­ment as well as more growth to con­sol­i­date that shift of pow­er.”

In an accom­pa­ny­ing arti­cle he argues:

…Aside from the long-run­ning debate about giv­ing devel­op­ing coun­tries more votes in the IMF, it has proved hard to ham­mer out a sub­stan­tive set of sub­jects on which the dis­parate Bric coun­tries have the same inter­ests.” Extract from FT.com

Beat­tie points out that for all their capac­i­ty joint­ly to wield influ­ence in glob­al forums, the BRICS do not have much in com­mon in their domes­tic pol­i­cy approach­es and few com­mon exter­nal inter­ests. This has been evi­dent in the Doha nego­ti­a­tions where India and Brazil, espe­cial­ly, have oppos­ing inter­ests in mat­ters such as agri­cul­tur­al trade lib­er­al­iza­tion, and at Copen­hagen where China’s inter­ests were not appar­ent­ly those of many devel­op­ing coun­tries; effec­tiv­el­ly sui gener­is. Beat­tie con­cludes that:

In diplo­ma­cy, as in eco­nom­ics, the pow­er wield­ed by the Bric coun­tries may end up being dis­tinct­ly weight­ed towards the wish­es of Bei­jing.”

I think all this is pret­ty sound. But…in my view we are wit­ness­ing, nonethe­less, a sec­u­lar change in glob­al gov­er­nance, to be marked by con­fu­sion, delay and irrel­e­vance for glob­al insti­tu­tions such as WTO that cling to a mode of “explic­it con­sen­sus” (as the Doha Dec­la­ra­tion puts it) in deci­sion-mak­ing. Such pre­sump­tive una­nim­i­ty or com­pli­ance is no longer like­ly except where the deci­sions con­cerned are inescapable—like those on the glob­al ‘stim­u­lus’ (or oth­er­wise triv­ial in a pol­i­cy sense, such as human­i­tar­i­an aid). The future seems, for now, to belong rather to pluri­lat­er­al deci­sion-mak­ing and insti­tu­tions in dif­fer­ent forms.

Lamy’s assessment of Copenhagen

It’s called whistling in the wind.

The out­come of the con­fer­ence in Copen­hagen rep­re­sents a step for­ward. The Kyoto Pro­to­col address­es about 30% of glob­al car­bon emis­sions. In con­trast, the frame­work accord ham­mered out in Copen­hagen last week may encom­pass the major­i­ty of world emis­sions. ” Extract from WTO | 2009 News items — Lamy prais­es Copen­hagen efforts, calls for more to be done

The Direc­tor-Gen­er­al of WTO goes on to claim that “…in the end, it is only through a mul­ti­lat­er­al process that we can achieve results which are legit­i­mate and cred­i­ble.” But this is an argu­ment seems to stand only when propped-up by jar­gon. Process­es? What are they? Agree­ments to a coher­ent sin­gle-frame­work for action? Only a weak one at best, and like­ly com­pro­mised by excep­tions, con­ces­sions and deals (qv Copen­hagen, Doha). Or are ‘process­es’ just talk?

Global governance in the aughties

First, bodice-rip­ping as polit­i­cal the­o­ry

We live in an era in which unprece­dent­ed glob­al­iza­tion and eco­nom­ic inter­de­pen­dence, lib­er­al-demo­c­ra­t­ic hege­mo­ny, nan­otech­nol­o­gy, robot­ic war­fare, the ‘infos­phere,’ nuclear pro­lif­er­a­tion and geo­engi­neer­ing solu­tions to cli­mate change coex­ist with the return of pow­er­ful auto­crat­ic-cap­i­tal­ist states, of a new Great Game in Cen­tral Asia, of impe­ri­al­ism in the Mid­dle East, of pira­cy on the high seas, of rival­ry in the Indi­an Ocean, of a 1929-like mar­ket crash, of 1914-style hyper­na­tion­al­ism and eth­nic con­flict in the Balka­ns, of war­lords and failed states, of geno­cides in Bosnia, Rwan­da and Dar­fur, and of a new holy war waged by rad­i­cal Islamists com­plete with caliphates and behead­ings rem­i­nis­cent of medieval times.” Extract from The Nation­al Inter­est


Here’s a more sober, more plau­si­ble, assess­ment of the like­ly route for the glob­al gov­er­nance frame­work (at least) from the U.S. Nation­al Intel­li­gence Coun­cil:

The exist­ing inter­na­tion­al organizations—such as the UN, WTO, IMF, and World Bank—may prove suf­fi­cient­ly respon­sive and adap­tive to accom­mo­date the views of emerg­ing pow­ers, but whether the emerg­ing pow­ers will be given—or will want—additional pow­er and respon­si­bil­i­ties is a sep­a­rate ques­tion. Indeed some or all of the ris­ing pow­ers may be con­tent to take advan­tage of the insti­tu­tions with­out assum­ing lead­er­ship bur­dens com­men­su­rate with their sta­tus. At the same time, their mem­ber­ship does not nec­es­sar­i­ly have to involve heavy respon­si­bil­i­ties or bur­den-shar­ing, allow­ing them to pur­sue their goals of eco­nom­ic devel­op­ment.

That veiw from mid-2008 is hold­ing up pret­ty well, so far…except that ‘accom­mo­dat­ing views’ does not mean doing any­thing. Which explains much about why WTO is stymied and why the Copen­hagen con­fer­ence of the UN Cli­mate Con­ven­tion was a farce (there are oth­er rea­sons, too, in each case).

China worries about U.S. carbon tariffs

In a speech in the U.S. yes­ter­day, Tung Chee-hwa, vice-chair­man of the Chi­nese People’s Polit­i­cal Con­sul­ta­tive Con­fer­ence (CPPCC) hit out at plans for car­bon tar­iffs in the Democ­rats’ bill for emis­sion con­trols

A top advis­er to the Chi­nese gov­ern­ment on Tues­day warned that a pro­posed US bor­der tax on car­bon sen­si­tive mate­ri­als ‘smells of pro­tec­tion­ism’ and could spark retal­i­a­tion from devel­op­ing coun­tries.” Extract from a report in the Finan­cial Times

Tung, the for­mer Chief Exec­u­tive of Hong Kong, was talk­ing about the Wax­man-Markey bill that pro­vides for ‘bor­der adjust­ments’ should cap-and-trade costs for ener­gy-inten­sive indus­tries not be ful­ly off­set by U.S. gov­ern­ment sub­si­dies. Chi­na has been cam­paign­ing against this draft leg­is­la­tion since it’s intro­duc­tion.

They are obvi­ous­ly trou­bled by the appar­ent deci­sion of the Oba­ma Admin­is­tra­tion not to oppose the use of car­bon tar­iffs.

India says ‘no’

Even IPCC chair­man Rajen­dra Pachau­ri con­sid­ers India is ‘very unlike­ly’ to change its oppo­si­tion to emis­sions tar­gets (for India).

 ‘If the ques­tion is whether India will take on bind­ing emis­sion reduc­tion com­mit­ments, the answer is no. It is moral­ly wrong for us to agree to reduce when 40 per­cent of Indi­ans do not have access to elec­tric­i­ty,’ said a mem­ber of the Indi­an del­e­ga­tion to the recent­ly con­clud­ed U.N. con­fer­ence in Bonn” Extract from The Wash­ing­ton Post

The FT thinks it may be about the mon­ey. But I doubt it. We’ve seen ster­ile dia­log like this many times in the mul­ti­lat­er­al trade sys­tem. There isn’t enough mon­ey to buy the com­pli­ance of coun­tries that have con­flict­ing domes­tic incen­tives.

A tangle of carbon taxes

A big storm on the hori­zon… get ready for it

Bor­der tax adjust­ments (‘car­bon tar­iffs’) are inevitable once manda­to­ry car­bon tax­es or emis­sion caps with mar­ket val­ue are applied to pro­duc­tion. Now, the Oba­ma admin­is­tra­tion acknowl­edges that:

Mr. Chu, speak­ing before a House sci­ence pan­el, said estab­lish­ing a car­bon tar­iff would help ‘lev­el the play­ing field’ if oth­er coun­tries haven’t imposed green­house-gas-reduc­tion man­dates sim­i­lar to the one Pres­i­dent Barack Oba­ma plans to imple­ment over the next cou­ple of years. It is the first time the Oba­ma admin­is­tra­tion has made pub­lic its view on the issue” Extract from Wall St Jour­nal

The bor­der adjust­ment of tax­es by means of a ‘car­bon tar­iff’ is not a prob­lem in itself. Bor­der adjust­ments for VAT and con­sump­tion tax­es are a long­stand­ing GATT/WTO sys­tem that has been un-con­tro­ver­sial since the 1970s. The biggest prob­lem is a polit­i­cal prob­lem posed by inter­na­tion­al legal con­cepts of equi­ty and respon­si­bil­i­ty that are bound to cause bit­ter con­flict between gov­ern­ments long before any sys­tem of ‘car­bon tar­iffs’ is put in place.

What the carbon caps will cost

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The Reserve Bank of Australia’s quar­ter­ly State­ment on Mon­e­tary Pol­i­cy (6 Feb, 09) con­tains the lat­est estimate—using the Trea­sury mod­el, is my guess:

Over­all, assum­ing an emis­sions per­mit price of $25 per tonne of CO2-e, it is esti­mat­ed that the net result will be to reduce GDP growth by less than 0.5 per­cent­age points in total, spread over the first cou­ple of years fol­low­ing the intro­duc­tion of the CPRS, with a reduc­tion of about 0.1 per­cent­age points per year thereafter.4 These effects, how­ev­er, must be con­sid­ered against the longer-term costs of not tak­ing steps to ame­lio­rate the neg­a­tive effects aris­ing from cli­mate change.” extract from State­ment on Mon­e­tary Pol­i­cy

That may sound pret­ty modest…until you express the income loss in dol­lars and cents and ask your­self what we’re buy­ing with our mon­ey (and our chil­drens’).