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Protester holds a sign reading: Protect workers and the environment

"We continue to hear very little about how we must reform trade rules to achieve our climate goals and a just transition for people," the author writes. (Photo: Stephen Melkisethian/flickr/cc)

Did Obama's Trade Legacy Just Hammer the Green New Deal?

The path towards achieving climate goals must address the revamping of trade rules

One of core elements of the proposed Green New Deal is a just transition—the creation of fair wage jobs that benefit communities, particularly those currently or formerly dependent on high polluting industries. In early July, a World Trade Organization (WTO) dispute panel ruled that renewable energy policies that supported local green jobs in eight U.S. states violate international trade rules. The case is a direct legacy of the Obama administration’s aggressive free trade agenda, which routinely ran roughshod over environmental and climate concerns. 

The WTO case was brought by India against policies in Washington, California, Connecticut, Minnesota, Montana, Massachusetts, Michigan and Delaware. Each state’s policies, whether for renewable energy or fuel, included some type of preference or incentives for “local content,” meaning that some aspect of the energy or fuel must be produced in that state to gain the preference. These preferences are designed to reward local businesses and ensure that new green markets for say, renewable energy, also benefit businesses in that state.  

These types of programs are common throughout the U.S. and in other countries and are viewed as models to be scaled up as part of the more ambitious Green New Deal—which emphasizes both carbon reductions and the creation of fair wage jobs as part of a just transition.  

India brought the case in response to an Obama administration WTO challenge to India’s solar program in 2013, which was decided in favor of the U.S. in 2016. India’s solar program gave preferences to Indian solar panel companies and was touted as a green jobs program and a critical part of the country’s Paris climate commitment. The Obama administration argued that India’s policy discriminated against U.S. solar panel manufacturers. In its defense, India pointed out that several U.S. states also have local content rules. Following the 2016 WTO ruling against India, former Citigroup executive and then-U.S. Trade Representative Michael Froman issued a warning to other governments attempting to support local, green businesses: “This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory `localization’ policies.” 

The Obama administration’s case against India’s solar program came as the administration was aggressively pushing the Trans Pacific Partnership, another free trade agreement that IATP and environmental groups opposed as a boon for the fossil fuel industry and a blow to addressing climate change.  

The new WTO ruling illustrates how disconnected trade rules are from national and local efforts to address climate change—and the urgent need to reform those rules. This wasn’t the first time the WTO had ruled against renewable energy, green jobs programs; it made a similar ruling in 2013 against an Ontario, Canada program. There are talks at the WTO about possible changes, including a moratorium on renewable energy related cases but those reforms are a long way off. At the same time, the United Nations Framework Convention on Climate Change (UNFCCC) deliberately chose not to address conflicts with trade rules as part of the Paris Climate Agreement—a decision that will have to be reconciled in the near future as trade and climate goals clash.  

The Trump administration’s approach to climate change and trade deals has been consistent with its domestic policy: Pretend it doesn’t exist and follow the directions of the fossil fuel industry. Trump’s New NAFTA ignores climate change, continues special corporate rights for the fossil fuel industry to pursue Mexico’s valuable oil fields and sets up new mechanisms to challenge regulations. There’s been a lot of talk about climate change and a Green New Deal as this Presidential election heats up, but we continue to hear very little about how we must reform trade rules to achieve our climate goals and a just transition for people. 

© 2021 Institute for Agriculture and Trade Policy

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