2012-02-24

Cry havoc! Protectionism goes international

The EU carbon trading brouhaha has gone from a nuisance to a potential trade war. I noted the news in China, but it seemed like a country-by-country rejection of the EU policy. Now, these countries are teaming up to harmonize their retaliation against the EU.

EU faces trade war over carbon law
China, the United States, Russia and 20 other nations have agreed to co-ordinate potential retaliatory trade measures against the European Union in response to a new law that requires airlines to pay for their greenhouse gas emissions.
After a two-day meeting here led by Russia, 23 countries signed what they called the “Moscow Joint Declaration.” If not yet engaged in a trade war, the countries declared a readiness to start one in a way that could add to the cost of tickets to Europe. They agreed to coordinate any retaliatory action against European-based airlines that fly internationally, like Air France and British Airways, and listed nine possible ways to do so.

“We intend to get the E.U.’s carbon trading measures either canceled or postponed,” Russia’s deputy minister of transport, Valery Okulov, told journalists after the declaration’s adoption. In addition to the United States and China, supporters included Cuba, India, Japan, Saudi Arabia and Nigeria.
This is a serious rebuke of the EU and note that these countries do not agree on sanctions against Iran or other areas where economic policies are the thrust of the debate. Yet, for a slightly less political situation, they easily join together to fight encroachment on their economic sovereignty. This is the same exact reason why the EU itself is falling apart.

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