Here's an amusing article by World Trade Online on How to Avoid a Carbon-Taxing Trade War
It's paywalled. This is what we can see, quotes and text as in the article.
Step 1: The World Trade Organization should create “an expert body” to price carbon restrictions, calculating (and periodically updating) the tax equivalent of “domestic carbon restrictions -- be they fees or regulation -- imposed by member companies,” argues Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics, in a new paper.
Step 2: WTO members should agree, “when credit is given consistent with the foregoing calculations,” that no member would bring “a case asserting violation of WTO...
Mish's Better Idea
Step 1: Don't Do Anything Stupid Like Start a Trade War
Step 2: Not Needed
Mish Proposal vs World Trade Online
I propose not doing anything stupid.
World Trade Online wants to start by creating "an expert body" led by the WTO despite the fact that the WTO take decades to resolves disputes.
Of course, it is idiotic to believe in "expert bodies" in the first place. Even if they did exist, it would take years to get a global consensus on creating that body.
Trump's Global Trade War Was Over Manufacturing, Biden's Will Be Over Clean Energy
I covered this on August 31, in Trump's Global Trade War Was Over Manufacturing, Biden's Will Be Over Clean Energy
EU Tries to Convince Trading Partners Its Carbon Tax is Not a Tax
On July 6 I noted EU Tries to Convince Trading Partners Its Carbon Tax is Not a Tax.
CBAM, the EU's carbon border adjustment mechanism looks like a tax, acts likes a tax and is indeed a tax. However, the EU says it is not a tax, but an "adjustment mechanism".
Hope For Nothing But Expect a Mess
If anything happens in Congress that gets Biden's $3.5 trillion bill off the ground it will be a guaranteed mess.
There is no way the WTO or anyone else will resolve it, and the bill itself is stagflationary.
The best thing that can possibly happen is nothing. Anything else is a mess.
Odds of Nothing Improve
Fortunately, the odds of nothing have greatly improved.
In an unexpected twist to Biden's $3.5 trillion budget proposal, Senator Joe Manchin wrote this Op-Ed for the Wall Street Journal: Why I Won’t Support Spending Another $3.5 Trillion
Seven Key Takeaways From Manchin's Op-Ed
- Inflation tax on every middle- and working-class American.
- Congress should hit a strategic pause on the budget-reconciliation legislation.
- Making budgetary decisions under artificial political deadlines never leads to good policy or sound decisions
- If I can’t explain it, I can’t vote for it, and I can’t explain why my Democratic colleagues are rushing to spend $3.5 trillion.
- This is even more important now as the Social Security and Medicare Trustees have sounded the alarm that these life-saving programs will be insolvent.
- It was wrong when the Republicans did it, and it is wrong now.
- It would serve us well to remember that members of Congress swear allegiance to this nation and fidelity to its Constitution, not to a political party.
Recall AOC's threat to senator Sinema.
On July 30, I noted AOC Goes After Senator Krysten Sinema With a "No Climate, No Deal" Threat.
Also recall my July 15 article The Greens Hijack Biden's $3.5 Trillion Budget Proposal (That Could be a Blessing)
My idea was the bill was so loaded with garbage that it might sink everything.
If AOC or Pelosi or the Progressives hold firm, then if either Manchin or Sinema hold firm we all win!
By win, I mean "nothing happens" in Congress which in turn implies something very real happens to the US and Global economies: We avoid a carbon-based global trade war and the Accompanying Stagflation Threat in Which Congress Has the Key.
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