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Trading Places
Published on Saturday, December 23, 2006 by the Boston Globe
Trading Places
by Robert Kuttner

Global warming has reached a point where some ski resorts in the Alps find themselves with no snow as the Christmas ski season approaches. Against this background, some European leaders are proposing a new hard line against major polluting countries that do not take global climate change seriously.

That would be the United States.

French Prime Minister Dominique de Villepin has proposed a "green tax" on the exports of major nations that have not ratified the Kyoto Accords for reducing greenhouse gases. Villepin reasons that Europe, which imposes costs on its industries to cut pollution, incurs a competitive advantage while dirtier American producers take a free ride on Mother Nature.

You remember Villepin? As foreign minister during the run-up to the Iraq war, he was widely ridiculed for questioning whether the Bush administration was telling the truth about Saddam' s alleged weapons of mass destruction. American patriots railed against Villepin, boycotting French wines and renaming one of America' s favorite fast food "freedom fries."

Now the man wants to tax American exports (if he can find any!) for adding to the planet's pollution.

But maybe the French are right on this one, too. It is scandalous that the United States has failed to participate in the Kyoto system for reducing the carbon emissions that cause catastrophic global climate change.

Increasingly, we are told, the world is one big marketplace. Some market enthusiasts insist the market now moots the role of governments. But if the world is not to drown literally on a rising tide of melted water created by the waste products of its collective industrial output, then some authority, whether national or transnational, had better get serious about limiting carbon emissions.

That authority is certainly not going to be President Bush.

But what right, you might ask, does the global trading system have to impose its norms on the United States? As it happens, the United States has long done exactly that with other nations.

Washington is accustomed to using the global trading system as its leverage for imposing its preferred rules of free-market economic behavior on the rest of the world. In the 1990s, countries that got in hock to American banks got hauled before the International Monetary Fund, and were made to reduce their social outlays, balance their budgets, cut social regulations on business, and open their banking systems to foreign speculation. This was known as IMF "conditionality." It was an open secret that the IMF was doing the bidding of the United States and specifically of American bankers.

The recipe proved to be such a disaster that several nations vowed never to do business with the IMF again. The developing countries that turned in the best performance -- China, Japan, Korea, India -- were those that rejected the whole approach.

More recently, the U S government has tried to use the trading system to compel other countries to respect American norms of "intellectual property." That means long periods of patent, trademark, and copyright protections, and no special treatment even for lifesaving drugs needed by the third world.

But nations such as India and Brazil fought back, offering to supply cheap generics to poor countries. Despite the immense power of the drug industry, the U S had to backpedal and allow some cheaper drugs.

Now the French have decided that any number can play this game. If other goals can be imposed on the trading system rules about intellectual property, rules about financial markets--what's sauce for the goose is sauce for the gander.

Despite America's vaunted claim of being the last superpower left, Washington no longer has the leverage it once enjoyed to make others bend to its preferred rules while claiming special privileges for itself.

With America bogged down in Iraq, a trade deficit that hits new records with each succeeding year, and the dollar at new lows against the euro, the United States can no longer assume it is exempt from the sort of rules it likes to impose on lesser nations. Even the Italians and the Spanish, among the lesser powers of Donald Rumsfeld's "Old Europe" are now on the verge of bringing changes against CIA agents for resorting to extra-legal kidnapping on their sovereign soil.

How to use the trading system for social goals is not a simple matter. But if we are to be one big economy, we definitely need one set of rules -- and not all of them will be made exclusively in America. Rules for the environment are a good place to start.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos.

© 2006 The Boston Globe


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