Cap-and-trade legislation passed by the House of Representatives late on Friday will make it easier for the US to impose import tariffs against countries that do not control their own carbon emissions.
Passage of the bill – it is likely to face an even tougher fight in the Senate – was welcomed by environmental groups and some sections of business, but others warned the so-called “border tax adjustment” provisions could aggravate tensions with the US’s trading partners.
Such border measures – intended to level the playing field by equalising carbon emission charges between domestic production and imports – might be permitted by World Trade Organisation rules, according to a report published last week by the WTO and the United Nations.
But judicial rulings on similar disputes made in the past by WTO arbitration panels leave considerable doubt. Countries such as China complain the measures can act as a form of backdoor protectionism.
Provisions added to the House bill at a late stage would automatically impose such border measures on imports in 2020 unless both the White House and Congress were to agree to waive them. “[That] automatically sets the switch for border measures to ‘on’ and makes it harder to turn it off,” said Jacob Werksman, programme director at the World Resources Institute.
Jake Colvin, vice-president for global affairs at the National Foreign Trade Council, a business association, welcomed the part of the bill that encouraged the US to negotiate a global deal to reduce carbon emissions.
But he added: “We are disappointed that, without a global deal, the legislation would all but require the president to impose border measures against any number of countries.” The strict rule “may harm relations with US trading partners – and could violate global trade rules”.
Environmental campaigners welcomed the bill, saying it put the US in a strong position to negotiate a climate change treaty to replace the Kyoto protocol. Talks will culminate in a conference in Copenhagen in December.
Annie Petsonk, counsel for the Environmental Defense Fund, said the emissions reductions laid out in the bill would be enough to hold global temperature rises to no more than 2°C – the level scientists reckon is the limit of safety, if other developed countries were to agree similar cuts and if large developing nations were to take action to curb emissions.

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